Performance Improvement 2001. Decision Making in Managed Care Organizations: Implications for the Development and Diffusion of New Technologies


This project examined a broad range of managed-care decision making strategies, their implications for the development and diffusion of new technologies, and their impact on future health care costs, especially Medicare program costs. Regarding Managed Care Organizations (MCOs), most stress the clinical orientation of their technology assessment process and assert that cost is very rarely an explicit consideration. Price is more often a factor in setting drug formularies and all plans indicated they would not refuse to cover a technology that had been generally accepted as the standard of care, no matter how expensive. The report found no evidence of an important independent effect of Medicare managed care among either MCOs or manufacturers. MCOs generally set uniform coverage policies for their Medicare and commercial products. The conclusions are: while managed care plans do attempt to control use of certain technologies, their ability to do so is restricted. Also, while managed care influences manufacturer R&D investment decisions, it is not clear that it has changed the likelihood that cost-increasing technologies will come to market, nor has it altered the fundamental feedback relationship between insurance, technological innovation, and health care expenditure growth.

AGENCY SPONSOR: Office of Strategic Planning

FEDERAL CONTACT: Brigid Goody, 410-786-6640

PIC ID: 7170

PERFORMER: Health Economics Research, Inc., Waltham, MA