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Driven By Rising Costs, Managed Care Plans Dust Off Practices That Triggered 1990s Backlash, Health Affairs Article Says

Preauthorizations, Profiling of Physicians' Utilization Patterns Used More Frequently by Health Plans

Media Advisory
Aug. 11, 2004

Jon Gardner: (301) 347-3930
Alwyn Cassil: (202) 264-3484

ASHINGTON, D.C.—Responding to rising costs, some health care plans are bringing back such unpopular practices as utilization review, increasing out-of-pocket expenses, and steering patients to more cost-effective providers, according to an article published today on the Health Affairs Web site.

Glen Mays, an associate professor in the Department of Health Policy and Management in the College of Public Health at the University of Arkansas for Medical Sciences, and two colleagues analyzed interviews conducted through the Community Tracking Study (CTS) site visits, which monitor health care markets in 12 representative metropolitan areas across the country every two years.

Based on interviews with providers, insurers, employers and others in the health care markets, Mays and his colleagues found that plans are more often requiring preauthorization for outpatient services and specialist referrals. They also found that plans are reviewing inpatient services while patients are in the hospital in an effort to shorten hospitalizations, and they are reviewing claims to profile providers based on health care use and quality.

Many of these techniques were criticized during the managed care backlash of the 1990s and had been removed from plans as insurers responded to pressure from enrollees and employers. But with premiums rising at double-digit rates, some plans have now begun reintroducing the cost-control measures.

While use of these tools is on the rise, cost-saving changes in benefit design have received more attention. Employers and insurers have begun increasing copayments, coinsurance and deductibles, as well as offering lower-cost plans to enrollees who agree to limit their choice of providers or select catastrophic plans with high deductibles.

"In the wake of the managed care backlash, most plans remain cautious about imposing new requirements and constraints on hospitals and physicians," Mays says. "Moreover, health plans lack the bargaining power to impose such requirements on the large, consolidated health care providers that have emerged in many markets.

"Instead, plans are focusing on improving provider relationships through better communication and smoother business transactions," he says. "Whether these activities will lead to increased provider engagement in cost-containment and care-management activities remains to be seen."

Mays’ coauthors were Gary Claxton, vice president of the Henry J Kaiser Family Foundation, and Justin White, a research assistant at Mathematica Policy Research. Their research was conducted at the Center for Studying Health System Change and supported by the Robert Wood Johnson Foundation. Mays’ article can be read at

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Health Affairs, published by Project HOPE, is a bimonthly multidisciplinary journal devoted to publishing the leading edge in health policy thought and research. Additional peer-reviewed papers are published weekly online as Health Affairs Web Exclusives at Health Affairs Web Exclusives are supported in part by a grant from the Commonwealth Fund.

The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded principally by The Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.


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