Policy Area Three—Local Markets and Managed Care
Changing Nature of Managed Care
esponding to the consumer backlash against
tightly managed care, health plans are offering less
restrictive managed care products and eliminating
or relaxing referral and authorization requirements.
Health plan efforts to rein in growth in pharmaceutical
spending through price reductions and changes
in prescribing habits have largely failed. Instead,
plans moved rapidly to a three-tier benefit that
seeks to make consumers more cost conscious by
requiring them to pay more for more expensive
drugs. New plan products are extending the tiered
design to hospital and provider networks, requiring
consumers to pay more to visit certain, often higher-cost,
providers. While such approaches may allow
health plans to regain some of their lost leverage
with providers, they also can adversely affect low-income
consumers and those in poor health.
Meanwhile, state policy makers have been implementing Medicaid prescription drug cost-containment strategies that appear to be creating significant gaps in access to drugs for low-income Americans in the program. One in four nonelderly adult Medicaid beneficiaries surveyed by HSC reported being unable to afford to fill a prescription in the previous 12 months, with beneficiaries in states with more restrictions tending to have more access problems.
Leveraging the Retreat from Managed Care
ith the retreat from tightly managed care and
increasing provider leverage, many hospitals have
returned to a traditional retail strategy of competing
for patients and physicians rather than competing
for managed care contracts. Hospital investment in
a broad array of expensive new services and marketing
efforts may contribute to rising health care
cost trends. As a result, some policy makers are
contemplating a return to or tightening of such
traditional regulatory strategies as certificate-of-need
laws.
Responding to Medicare Changes
SC has tracked the rise and fall of Medicare+
Choice (M+C) in local communities closely.
Positive market conditions before passage of the
Balanced Budget Act of 1997 (BBA) helped to spur
M+C growth in plan and beneficiary participation,
while declining market conditions, especially rising
health care costs, intensified the impact of BBA
changes in payment and other policies. It was this
collision of public policy and private market forces,
rather than policy changes alone, that brought M+C
growth to a halt. HSC researchers also contributed
to the M+C payment reform debate. Finally, Paul
Ginsburg used HSC data in his testimony to
Congress on the potential impact of Medicare
physician fee cuts, warning that continued cuts in
payment rates risked reducing beneficiaries' access
to care because of an overall tightening in physician
capacity.
USA Today
 February 20, 2002 |
|
“It’s like Wendy’s vs. McDonald’s,” says Kelly Devers, a health
researcher in Washington, D.C. “If one adds a service, the other will
copycat it. They’re fighting for their lives and want to make sure they
don’t give up turf.” (From an article describing the medical arms race.)
|
Related Publications by HSC Staff on Local Markets and Managed Care
Issue Brief No. 52, May 2002
Reversal of Fortune: Medicare+ Choice Collides with Market Forces
by Joy M. Grossman, Bradley C.
Strunk and Robert E. Hurley
Issue Brief No. 51, April 2002
Prescription Drug Access: Not Just a Medicare Problem
by Peter J. Cunningham
Health Affairs, Vol. 21, No. 1,
January/February 2002
The Changing Face of Managed Care
by Debra A. Draper, Robert E.
Hurley, Cara S. Lesser and Bradley
C. Strunk
Written testimony and opening statement before the Subcommittee on Health of
the House Committee on Ways and Means, Hearing on Medicare Physician Payment,
Feb. 28, 2002, www.hschange.org
by Paul B. Ginsburg
Presentation at HSC conference, Emerging Health Care Market Trends, Dec.
10, 2001, www.hschange.org
The Return of the Medical Arms Race
by Kelly Devers
American Journal of Managed Care, Vol. 7, No. 11, November 2001
Managed Care in the Doctor's Office: Has the Revolution Stalled?
by Jeffrey Stoddard, James D.
Reschovsky and J. Lee Hargraves
Issue Brief No. 45, November 2001
Consumers Face Higher Costs as Health Plans Seek to Control Drug Spending
by Glen P. Mays, Robert E. Hurley
and Joy M. Grossman
Health Care Financing Review, Vol. 23, No. 2, Winter 2001
Premium Rebates and the Quiet Consensus on Market Reform for Medicare
by Roger Feldman, Bryan Dowd,
Robert Coulam, Len Nichols and
Ann Mutti