to first-rate health care, such as research, training, specialized care, and access to ... Twenty- one percent of managed-care enrollees rated their plans as fair or.
MANAGED CARE SERIES
The Culture of Managed Care: Implications for Patients KAREN DAVIS, PHD, CATHY SCHOEN, MS, DAVID R. SANDNIAN, MPA*
AND
Patients' experiences with managed care raise troubling warning signs about the quality of care in the rapidly changing tJS health-care system. Fifty-one million Americans, nearly 20% of the population, were enrolled in health maintenance organizations (HMOs) by the end of 1994.1 Today, managed care enrolls 7 of 10 workers and their families who are employed by medium- and large-sized firms (employing more than 200 persons) - an increase from 47% in 1991 and just 29% in 1988.2 Similarly, rapid growth has occurred among the publicly insured. Medicaid managed-care enrollment has more than doubled in the past 2 years and, today, nearly one-third of all beneficiaries are in some form of managed care.3 Medicare, long considered to be the last bastion of fee-forservice medicine, is the next market that will experience deeper penetration by managed care. The availability of information to consumers about managed care plans has not kept pace with this rapid growth. The title of a recent article in the New York Times business section underscores this disparity.4 Many Americans face this dilemma. For public and private purchasers of insurance, the question has become that of which plan to select for themselves or their employees. But those with no choice of plans confront an even greater dilemma: how can they get quality care for themselves and their families? Consumers need to be better informed about the choices available to them, * Karen Davis is President, Cathy Schoen is Director of Research and Evaluation, and David R. Sandman is Program Associate for The Commonwealth Fund, One East 75th Street, New York, NY 10021.
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and policy makers have a corresponding responsibility to set the rules by which managed care will operate.
Managed Care: Promise and Potential Managed care has been embraced for its potential to improve the efficiency and effectiveness of care. In theory, it has much to offer.5 At its best, it emphasizes primary and preventive care and can improve access to care. For people without a regular source of care, or who use emergency rooms for routine care, managed care provides a stable point of entry into the medical system and to a provider that they can rely on. In theory, managed care also has the advantage of coordinating patient care; this feature is particularly important for the chronically ill and for those who need a complex array of services from multiple sources. For example, the Commonwealth Fund Women's Health Survey found that 46% of all women rely on two physicians for their care: a primary-care doctor and an obstetrician/gynecologist.6 Coordinating this care in a feefor-service system can be problematic, but at least in theory, this care can be well coordinated within a single managed-care plan. Finally, managed care is attractive because it offers the opportunity to hold plans accountable for the health outcomes of their members and for the quality of care that they provide. When managed care fulfills its promise, it can be very good indeed.
Managed Care: Risks and Concerns At its worst, however, managed care could become simply a tool for cutting costs regardless of access and quality concerns. The financial incentives associated with managed care encourage providers to deny services and to trim corners, such as foregoing specialist care even when necessary. Capitation rewards physicians who provide less care, not more. Whereas costs are relatively easy to measure in a market-driven system, the quality of care provided by plans is not so easily judged. The pressure to lower costs, either from employers or from shareholders in publicly held plans, can lead to substandard care for patients.
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Managed care also has serious implications for the broader health-care system. As cross-subsidies are squeezed out of the system, there is concern that many items long considered essential to first-rate health care, such as research, training, specialized care, and access to teaching hospitals and centers of excellence, will no longer be available. The survival of safety-net providers in urban communities is also at risk as Medicaid managed-care plans divert patients and revenues away from these historic providers of last resort for the uninsured.
The Commonwealth Fund Survey of Patient Experiences with Managed Care All of these concerns are paramount in an era when patients have very little information about the quality of different plans. How can health-care practitioners and consumers begin to think about these issues? The first step is to listen directly to what patients have to say about their experiences with managed care. To do so, the Commonwealth Fund sponsored a survey of working families in three cities: Boston, Miami, and Los Angeles. The survey was conducted by Louis Harris and Associates, Inc. in 1994 with 3,000 patients, 1,000 in each city. One-half of the patients were enrolled in managed-care plans and the other half obtained care on a fee-for-service basis.7 Overall, the survey found that persons enrolled in managed-care plans, either HMOs or preferred-provider organizations (PPOs), tended to be less satisfied with their plan and with their healthcare services than those in fee-for-service arrangements. Twentyone percent of managed-care enrollees rated their plans as fair or poor, compared with 14% of those in fee-for-service care systems. In terms of quality, 15% of managed-care members rated the quality of their plans' services as fair or poor, compared with 6% of those in fee-for-service plans. This difference extended to the quality of physicians; 17% in managed care rated their plan's doctors as fair or poor compared with only 4% in fee-for-service (Fig. 1).
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Percent rating plan fair or poor 25 -21 20 15_ 41
U Fee-for-Service
1E1 Managed
Care
-0 -8n1
15
_
4 51
10
Overall
Quality of Services Quality of Doctors
FI(;. 1. Satisfaction wsith plan: managed-care members are less satisfied. Source: Commonxwealth FLund NManaged Care Survexy, Lotis Harris and Associates, 1994.
The survey also looked beyond overall quality ratings to determine ratings on detailed dimensions of care. When asked about their choice of doctors, managed-care members were five times more likely to report fair and poor ratings than their fee-for-service counterparts (25% v. 5%). Similarly, 23% of managed-care members rated their access to specialty care as fair or poor, compared with 8% of fee-for-service respondents. For access to emergency care, the difference was 12% versus 5%, respectively. In terms of waiting time for a routine appointment, major differences were reported: 28% of managed-care members rated this aspect of their plan as fair or poor care versus 11% of fee-for-service enrollees (Fig. 2). The relationship between having a choice of health plan and satisfaction was a major finding of the survey. One-third of those enrolled in managed care had no other option; others had a choice of plan type. There was little difference in overall satisfaction between those in fee-for-service (14%) and those who had voluntarily opted for a managed-care plan (16%), although differences remained significant on various dimensions of care. However, very high overall levels of dissatisfaction were reported by those in managed care who had no other choice (32%) (Fig. 3). Likewise, in terms of choice of physician, the least dissatisfied were the fee-for-service respondents (5%) and those who chose to be in
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Percent rating plan fair or poor 35 r
30
* Fee-for-Service E Managed Care
F
25 F 20 F
15 F
10F
Choice of MDs FIG. 2. Access to services:
Access to
Accessto Waiting Time Care care Appoinbtmn managed-care members are less satisfied. Source: Commonwealth
Specialty Emergency for Routine
Fuind Managed Care Survey, Loulis Harris and Associates, 1994.
managed care (22%). One-third, however, of those in managed care with no choice rated their choice of doctors as fair or poor. The same relationship between choice and satisfaction exists for access to specialty care, availability of emergency care, and waiting time for appointments (Fig. 4). The survey also revealed a surprising extent of turnover in Percent rating overall plan as fair or poor 35 r
30
25 20
15F IoF 5
F
0' Fee-for-Service
Managed Care
Managed Care without Choice FIG. 3. Choice matters: those without choice are least satisfied. Source: Commonwealth Fund NManaged Care Survey, Louis Harris and Associates, 1994.
with Choice
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Percent rating plan fair or poor 40
U FFS
35
34
33
11 MC w/ Choice * MC w/o Choice
30 22
20
181 10
~ ~ ~ ~10
8
~~~~~5
5
0
Choice of MDs
Aooess to Specialty Care
Acocss to Waiting Time
Emergency for Routine Care Appointment
FIG. 4. Access to services: those in managed care without choice are least satisfied. FFS, fee for service; MC, managed care. Source: Commonwealth Fund Managed Care Survey, Louis Harris and Associates, 1994.
health insurance coverage. Fifty-three percent of managed-care respondents had been enrolled in their plan less than 3 years. Such instability of coverage can lead to discontinuity of care, particularly for those in managed-care plans, because changing plans often also requires changing one's doctor (Fig. 5). The survey also found that three-quarters of those who changed plans in the last 3 years did Percent changing doctors when joining new plan 60 50
-
46
41
40-
30
29
-
2012
10 0
Fee for Service
Managed
PPO
HMO
Care
FIG. 5. Responses from those who had to change doctors when joining current plan: managedcare members have less continuity of care. PPO, preferred-provider organization; HMO, health maintenance organization. Source: Commonwealth Fund Managed Care Survey, Louis Harris and Associates, 1994.
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Percent rating plan fair or poor 30 26 27 25
-23
Net/Mix * PPO
20 17
15
O FFS
U! Group/Staff
-
14 14
-18
1112
10 50 Fi(;. 6. Comparison of ratings of plan ox crall and qualitv of services bh plan type: group/staff and IPA HNIOs outperform other tvpes of managed-care organizations. FPS, fee for service; Group/ Staff, group/staff-model health maintenance organizaton; Nct/NMix, netwNork/mixed-modcl health mlaintenance organization; PPO, preferred-prov,ider organization. Source: Commonwealth Fund Mlanaged Care Sturxev, Lotis Harris and Associatcs, 1994.
so involuntarily; usually because their employer changed plans or they changed jobs. There is a tendency to think of managed care as a single entity and to compare it with fee-for-service; but in fact, all managed care is not alike. Comparing managed-care plans by types of plans and organizational design often reveals surprising differences. The survey design enabled comparisons of managed-care respondents enrolled by type of HMO (group/staff model, independent practice association (IPA), network/mixed model) or a preferred provider organizations (PPO). In these three cities, enrollees rated group/staff HMOs similarly overall to ratings by enrollees in feefor-service plans. IPAs were associated with slightly higher levels of dissatisfaction, whereas network/mixed-model HMOs and PPO plans received the highest dissatisfaction ratings. This pattern across different types of managed-care plans generally persisted for ratings of overall quality of service as well (Fig. 6). Wide variation across different types of managed care plans is even more apparent on specific dimensions. For example, 8% of fee-forservice respondents rated their access to specialty care as fair or poor, compared with 20% of group/staff model enrollees and 35% of enrollees in network or mixed-model HMOs (Fig. 7).
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Percent rating plan fair or poor 40
3s 30
28
-
20;
10
20
21
Group/Staff
IPA
8
0
FFS
Mix/Net
PPO
Fi(;. 7. Access to specialty care: managed-care experience varies. FFS, fee for service; Group/ Staff, group/staff-model health maintenance organizaton; Net/Mix, network/mixed-model health maintenance organization; PPO, preferred-provider organization. Source: Commonwealth Fund Managed Care Survey, Louis Harris and Associates, 1994.
Taken as a group, managed-care plans performed better than fee for service on one dimension: out-of-pocket costs. People in fee-forservice plans are more likely to rate their plans as fair or poor on this aspect. Among different types of managed-care organizations, however, ratings of reasonableness of out-of-pocket costs varied widely. The group/staff model HMO enrollees reported the highest ratings on reasonableness of fees and the least dissatisfaction with fees. In strong contrast, PPO members reported high levels of dissatisfaction with costs, equal to or exceeding concerns in fee-for-service plans (Fig. 8). Taken together, all of these findings suggest that it is a mistake to group all forms and types of managed care together. Consumers, patients and practitioners will need to become more sophisticated in their thinking about managed care and learn how plans work and perform. Based on this three-city survey, plans vary widely by organizational type and variations may also be substantial among plans of a given type.
Holding Managed Care Accountable The Fund's survey of patient experiences reveals numerous warning signs on the road to managed care. Without a system in
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Percent rating plan fair or poor 50
40
38 32
30
-27 21
20
16
10 0
FFS
Group/Staff
IPA
Mix/Net
PPO
Fi;. 8. Reasonableness of ooti-of-pocket costs: managed-care experience varies significantly. F ES, fec for service; Groop/Staff, groLp/staff-model health maintcnance organizaton; Net/NIix, net-work/mixcd-model health maintenance organization; PPO, preferred-provider organization. SooLrce: Commonswcalth FoLnd Nlanagcd (Care Survev, Loouis Harris and Associates, 1994.
place to hold plans accountable for quality health care, a marketdriven environment may open the door to plans acting solely from narrow business interests to cut costs. To ensure that the market works for the health and quality of life for all Americans, we must consider developing new "rules of the game" that reward plans that act in the patients' and public's interests. The Commonwealth Fund, other foundations, and public agencies are supporting a range of research and development activities that will provide new information about managed care's performance and build our capacity to evaluate access and quality of care.8 As first steps toward holding managed-care plans accountable, policy makers will need to innovate in at least eight basic areas: 1. Strengthen minimum standards. Approximately one-third of managed-care plans have voluntarily sought accreditation from the National Committee for Quality Assurance and only onethird of those have received full accreditation. Clearly, we are a long way from realizing minimum standards for the industry. Accreditation should be mandatory, not voluntary, and plans that fail to meet minimum standards should be barred from insuring the Medicaid and Medicare populations.
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2. Monitor access and quality. We must build the capacity and authority to assess access and quality of care using regular patient surveys, risk-adjusted clinical outcome measures, and comparable performance measures across plans. Accurate and timely information should be available to patients and to purchasers such as employers and the government. 3. Offset perverse financial incentives. Payment methods that reward denials of needed care or that encourage plans to avoid sicker patients are contrary to public health goals. We must experiment with innovative reimbursement methods that encourage plans to invest in and improve care for the sick and that reinforce desirable insurance and medical care practices. 4. Patient rights. We must pay more than lip service to the views of patients and we must provide consumers with the information necessary for them to participate in decisions regarding their health care. When patients are asked to select entire systems of care, necessary protections include expedited grievance and appeals processes, access to second opinions, "escape valves" through point-of-service options, patient advocacy and participation on plans' governing boards, and patient oversight committees at the state level with the authority to work directly with plans. 5. Public disclosure. Communities and individuals should have access to public information regarding plan performance, including data on grievances, complaints, appeals and arbitration results, and administrative fines. Public disclosure would encourage plans to avoid serious complaints and to expedite the resolution of problems. 6. Physician responsibility and ethics. The physician's historic role as patient advocate must be preserved. Physicians should not fear exclusion or dismissal from plans for serving sicker patients. "Gag rules," which prevent physicians from discussing care options with patients, should be prohibited. 7. Fair marketing. Standards to prevent pressure tactics, false promises, and misleading information are potential checks on marketing abuses. For vulnerable populations, prohibitions
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against direct marketing and oversight of marketing materials may be necessary. 8. Subsidies for the uninsured and essential services. Community care obligations of plans should be explicit. Assuming that managed care is here to stay, we must preserve financing for care for the uninsured as well as essential components of the health care system including emergency care, research, and training.
Conclusion The nation is still in the early stages of its experiment with managed care. As health-care paradigms shift, access and quality are central concerns. Although the risks of market-driven changes are real, the promise of managed care is to ensure a better tomorrow in the delivery of health care, not a new set of access barriers and substandard patient care. Now is the time to listen to what patients have to say, and to move forward with initiatives to hold managed care accountable.
References 1. Group Health Association of America, 1995 National Directory of HA1lOs, Washington, DC: GHAA, June 1995. 2. KPMG Peat Nlarwick Executive Summary, Employer Surveys, 1995. KPMIG: August 1995. 3. Health Care Financing Administration, Medicaid MVilanaged Care EnrollmentReport, January 1996. 4. Gottlicb NI. "Picking a Health Plan: a Shot in the Dark. Who's Best? It Can Be Hard to Tell," NTewI York Times, January 14, 1996, pp. Fl, F9. 5. Davis K, Collins KS, Nlorris NI. NManaged care: promises and concerns. Health Affairs. 1994; 13(4):178 -189. 6. The Commonwealth Fund Survey of IV'omen's Health: New York, NY: Louis Harris and Associates, Inc.: July 1993. 7. Davis K, Collins KS, Schoen C, Miorris C. Choice matters. Enrollees' views of their health plans. Health Affairs. 1995;4(2):93-106. 8. Schoen C. NManaged care: a national experiment. Unanswered questions and potential risks. Bull NY Acad led. 1995;2(suLppl):645-656.
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