Health plan-provider showdowns on the rise.

During the past two years, increasing numbers of contract disputes between health plans and hospitals and physicians have erupted in local markets, according to recent Center for Studying Health System Change (HSC) visits to 12 nationally representative communities. Many providers are taking a hard line in negotiations, threatening to terminate health plan contracts if payment demands go unmet. These contract showdowns signal a shift in the balance of power in local markets toward hospitals and physicians and can potentially disrupt care for many patients, especially when the disputes involve communities' largest and most prominent hospitals and physician groups. This Issue Brief presents case studies of showdowns in Boston, Orange County, Calif., and Seattle, highlighting the changing market dynamics triggering these disputes and the implications for consumers, including rising costs and diminished access to care.

Financial performance and participation in Medicaid and Medi-Cal managed care.

This article assesses the participation and the financial performance of licensed health maintenance organization (HMOs) in the Medicaid market. The study found that participation by Medicaid Dominant plans has more than doubled from 11 percent in 1992 to 23 percent in 1998 while Medicaid membership in Commercial Dominant plans declined from 71 percent in 1994 to 51 percent in 1998. Both participating and non-participating plans incurred operating losses in 1998. Medi-Cal participating plans had higher operating margins than Medicaid participating plans throughout the United States. Interviews with key informants express concern about competence in program management, rate adequacy, decline in Medicaid enrollment, and turbulence forces of managed care market on Medicaid programs.

Consumers face higher costs as health plans seek to control drug spending.

Faced with relentless growth in pharmaceutical spending during the 1990s, health plans in recent years have tried to rein in costs by negotiating lower drug prices, encouraging more cost-conscious physician prescribing patterns and moderating the volume and mix of drugs demanded by consumers. Because of limited success with these strategies, plans have moved rapidly to three-tier benefit packages that offer broader drug choices but shift more costs to consumers. The move to three-tier pharmacy benefits appears to have slowed drug-spending growth for some plans--at least for the short term--but raises questions about the cost and quality of pharmaceutical care for consumers. Based on interviews with health plan executives in the 12 nationally representative communities the Center for Studying Health System Change (HSC) visits every two years, this Issue Brief examines plans' strategies to contain drug spending and the possible consequences for consumers.

Qualitative research and the profound grasp of the obvious.

OBJECTIVE: To discuss the value of promoting coexistent and complementary relationships between qualitative and quantitative research methods as illustrated by presentations made by four respected health services researchers who described their experiences in multi-method projects. DATA SOURCES: Presentations and publications related to the four research projects, which described key substantive and methodological areas that had been addressed with qualitative techniques. PRINCIPAL FINDINGS: Sponsor interest in timely, insightful, and reality-anchored evidence has provided a strong base of support for the incorporation of qualitative methods into major contemporary policy research studies. In addition, many issues may be suitable for study only with qualitative methods because of their complexity, their emergent nature, or because of the need to revisit and reexamine previously untested assumptions. CONCLUSION: Experiences from the four projects, as well as from other recent health services studies with major qualitative components, support the assertion that the interests of sponsors in the policy realm and pressure from them suppress some of the traditional tensions and antagonisms between qualitative and quantitative methods.

Revisiting employee benefits managers.

This article presents a case study of health purchasing practices of a sample of Employee Benefits Managers (EBMs) in a medium-size metropolitan area who were interviewed in 1991 and again in 1998. Findings show that employers have become less paternalistic in their health benefits; shifted plan options from indemnity coverage to managed care; increased employee cost-sharing; and placed greater decision-making on employees. EBMs embrace choice in health plans, have influenced the provider networks of plans, and have specified requirements for plan performance, however, use of quality information is limited.

Academic health centers and the changing health care market.

Academic health centers (AHCs) have supported their mission of patient care, education, and research through a complex system of cross-subsidies, many of which originate from patient care activities. The proliferation of managed care and health care reform initiatives, however, are threatening this traditional method of financing. This article begins by describing the financing of AHCs and the web of cross-subsidization that occurs at these institutions. The article then reviews the literature on the threats that AHCs are facing in the current health care market, how these threats are affecting their mission-related activities, and how they are responding to and managing these threats. The article concludes with a summary of our current understanding of AHCs and presents a research agenda of issues in need of further study.

Changing dynamics in employer-sponsored health insurance. One market's perspective.

Using their sponsored health benefits as a mechanism for change, employers have been able to exert significant influence over the nation's health care system. By examining how employers design, purchase and manage these programs, much insight can be gained. Twenty-five mid- to large-sized companies in a Middle-Atlantic metropolitan area were interviewed during May-July 1998. The study was modeled after a similar effort conducted in 1991, the results of which were published in this journal in 1993. The study found that many of the dynamics in employer-sponsored health insurance are changing. The findings suggest that a more distanced relationship between employers and employees is the major factor underlying the evolution, an intentional change to force a shift in medical care decision-making and responsibility to more of a shared process between the employee and the employer. These trends have important implications for local markets relevance and the national situation.

Reversal of fortune: commercial HMOs in the Medicaid market.

Between 1992 and 1996 the number of health maintenance organizations (HMOs) entering the Medicaid market grew at an average annual rate of approximately 22 percent. Participation among all ownership segments grew, resulting in a broad distribution of beneficiaries across the HMO industry. However, recent declines in financial performance within the industry appear to be more dramatic for plans with many Medicaid members. In addition, growing concerns about rate adequacy and volatility as well as expanding administrative demands raise questions about the long-term commitment of commercial HMOs to Medicaid participation. This paper analyzes operating characteristics and financial performance of licensed commercial HMOs from 1992 through 1996, drawing on indepth interviews with health plan executives and managed care stock analysts.

Employer purchasing of health care benefits: marketing implications of an organizational buying perspective.

While health care providers recognize employers as key purchasers of health benefits, there is little understanding of how employers make these important buys. We propose a model of health benefits acquisition using an organizational buying perspective, and discuss findings from a study of employee benefits managers. Critical marketing implications are presented.

Adoption of HIV-related services among urban US hospitals: 1988 and 1991.

Recent reports document that US hospitals vary considerably, notably by ownership, in the number of acquired immunodeficiency syndrome (AIDS) patients they treat. Still, little is known about other types of hospital response to human immunodeficiency virus (HIV) and AIDS and the relative strength of ownership as a determining factor. With annual survey data from the American Hospital Association the authors examine the formal adoption of HIV-related services among urban US hospitals at the turn of the decade. Descriptive analyses of 2 years of data (1988 and 1991) are presented. A multivariate logistic regression analysis, conducted on the 1991 data, tests for unique ownership effects on the likelihood that hospitals are heavy investors in HIV-related care. Patterns of service adoption for 1991 strongly resemble those for 1988. Nearly three fourths of urban US hospitals offer general inpatient AIDS care, and over half provide HIV testing. Few urban hospitals offer outpatient services; even fewer operate AIDS units. A substantial minority report no formal adoption of HIV-related services. For-profit hospitals stand out as least likely to formally adopt these HIV-related services. Those adopting a comprehensive set of HIV-related services typically are public or secular, not-for-profit in ownership, large, affiliated with a medical school, and high volume users of Medicaid funding. The logistic regression analysis suggests that public ownership is a key determinant of greater service investment, even after controlling for other explanatory factors. This study appears to mirror a familiar pattern of hospital response to undercompensated care in the United States.

Medicaid managed care: contribution to issues of health reform.

This chapter examines the emergence of managed care in Medicaid from an alternative to the mainstream delivery system for many beneficiaries. It offers a definition that encompasses the broad spectrum of program manifestations, and presents a brief historical perspective on the major eras of managed care in Medicaid. The major program prototypes are described and their contribution to enrollment growth is discussed. Research evidence is examined to address both operational issues and program impacts. Finally, we conclude with an appraisal of contemporary issues of importance and speculation on the next generation of Medicaid managed care programs with an eye to how federal and state health care reform proposals will shape this future.

Draconian buyers and Spartan suppliers: the harsh realities of a managed care world.

In this article, authors Robert Hurley, Ph.D.,and Jon Thompson, M.S.P., report results of a survey involving interviews with employee benefits managers. The results are notable in that they reveal purchasers in the process of challenging many of the fundamental assumptions regarding buying medical benefits and the services of medical professionals.

Schmoozing with the enemy: conversations with employee benefits managers.

During the past decade, the role of private employers in the purchase of health benefits has assumed critical importance. Purchaser-provider relationships are almost certain to grow more contentious in the current climate of escalating costs and recrimination about the sources of this escalation. This study reports the findings of structured, in-depth interviews with a sample of employee benefits managers from medium- to large-sized firms. The study focused on how these managers approach the health benefits buying process. A key finding is the wide variation observed in the buying process among a relatively homogeneous group of employers. Several prescriptive implications for health services managers are derived from the interviews, including the critical need to promote expanded and improved provider-employer communication.

Utilization managers in Medicare risk contract HMOs: from control to collaboration.

A study of utilization management (UM) practices in 13 health maintenance organizations (HMOs) with Medicare members was undertaken as part of an evaluation of the Medicare Risk Contract strategy. Although there were significant variations among HMOs, the common challenges of managing care for this particular population also led to important similarities. Most notable was the emphasis on redirecting the focus of control-oriented utilization review to promotion of continuous improvement in care management. The multiple medical and social service needs of Medicare beneficiaries have forced HMOs to cultivate close collaboration with physicians and UM personnel. Thus, UM personnel are involved throughout the continuum of care and play an important role in assisting HMOs to approach the "seam-less delivery system" ideal. HMOs report that the experience of managing care for Medicare members has made them more responsive to serving all of their members and to promoting long-term partnerships with their physicians.