Health Plans Facing Managed Care Backlash

Confronted with conflicting pressures to contain costs and provide unfettered access to care, health plans are stepping up scrutiny of some high-cost services while shifting more financial and care management responsibilities to consumers, according to a study by the Center for Studying Health System Change (HSC).

“Mindful of the managed care backlash, plans are increasing scrutiny of high-cost services, especially services that pose a high risk of inappropriate use, such as imaging,” said Paul B. Ginsburg, Ph.D., president of HSC, a nonpartisan policy research organization funded principally by The Robert Wood Johnson Foundation.

“Faced with employers seeking relief from double-digit premium increases and consumer demand for broad choice, health plans are under pressure to identify new ways to slow escalating premium trends while tempering consumer discontent,” Ginsburg said.

The study’s findings are detailed in a new HSC issue brief titled, “Managed Care Redux: Health Plans Shift Responsibilities to Consumers.” The study by Debra A. Draper, an HSC researcher from Mathematica Policy Research Inc., and Gary Claxton, a researcher from the Kaiser Family Foundation, is based on HSC’s 2002-2003 site visits to 12 communities: Boston; Cleveland; Greenville, S.C.; Indianapolis; Lansing, Mich.; Little Rock, Ark.; Miami; northern New Jersey; Orange County, Calif.; Phoenix; Seattle; and Syracuse, N.Y.

In the early and mid-1990s, managed care plans—in response to employers’ desires to slow rapidly rising health care costs—limited patients’ choice of physicians and hospitals, required prior approval for certain high-cost services and restricted physicians’ clinical authority. But consumers disliked restrictions on their care, prompting a powerful backlash. Competing to attract and retain workers in a tight labor market during the economic boom of the late 1990s, many employers moved away from insurance coverage with limited provider choice and extensive care restrictions. Many health plans expanded provider networks and eased restrictions on care by eliminating primary care physician (PCP) gatekeeping and prior approvals for specialty referrals and many tests and procedures.

During HSC’s 2000-2001 site visits, plans in the 12 communities reported no major changes in use of services as a result of the relaxation of utilization management controls. By 2002-2003, however, many plans had changed their assessment as the system responded to looser utilization management becoming more widespread, and many plans reintroduced administrative controls on care use.

Across the 12 communities, plans expressed little interest in returning to blanket pre-authorization requirements. Instead, plans are focusing on services that are high-cost or at high risk for inappropriate use. Targeted services include outpatient surgery, plastic surgery, diagnostic imaging, chiropractic care and physical therapy. Likewise, plans are increasing patient cost-sharing requirements for services that tend to be more discretionary and prone to overuse.

Other key study findings include:

• Health plans are ramping up care management through disease management and intensive case management programs for the small percentage of members that use a disproportionate share of resources.

• Health plans are developing new products that provide consumers with significant control over how they access and use health care. Plans also are encouraging more consumer involvement in weighing the costs and benefits of those decisions. New plan products include consumer-driven plans tied to health spending accounts, tiered-provider networks that require higher patient cost sharing and customized plan designs that permit employees to choose different cost sharing and benefit options after their employer has chosen a core set of benefits.

• Recognizing that increased patient responsibility for financial and care decisions will require better information, many health plans are stepping up consumer education efforts. Plans across the 12 communities are enhancing their Web sites to provide enrollees with more information about claims and available benefits and, in some instances, providing more general information about costs, quality and treatment options.