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Prevention and Managed Care: Opportunities for Managed Care Organizations, Purchasers of Health Care, and Public Health Agencies
Members of the CDC Managed Care Working Group
Sabrina M. Harper, MS Larry Burt, MSA Jeffrey R. Harris, MD, MPH CeCelia B. Collier, PhD Alan R. Hinman, MD, MPH R. Gibson Parrish, MD Barbara W. Kilbourne, RN, MPH Nancy M. Tips, MA Dixie E. Snider, Jr., MD, MPH National Center for Office of the Director Environmental Health
Steve Einbender, MPA Janelle Dixon Information Resources William J. Kassler, MD, MPH
Management Office Alan Friedlob, PhD
Karen E. White, MPA Edwin M. Kilbourne, MD National Center for HIV, STD, and Mary S. Moreman TB Prevention Steven M. Teutsch, MD, MPH Benedict I. Truman, MD, MPH Marjorie S. Greenberg, MA Epidemiology Program Office National Center for Health
Statistics Roger H. Bernier, MPH, PhD Edward W. Brink, MD Robert W. Pinner, MD Rafael Harpaz, MD, MS National Center for National Immunization Program Infectious Diseases
Edward L. Baker, Jr, MD, MPH Daniel A. Pollock, MD Randolph L. Gordon, MD, MPH Daniel M. Sosin, MD, MPH Ann S. Long National Center for Injury Guadalupe Olivas, PhD Prevention and Control Paul V. Stange, MPH Public Health Practice Program Office Scott D. Deitchman, MD, MPH
National Institute for Occupational Lynda A. Anderson, PhD Safety and Health Gail R. Janes, PhD Nora L. Keenan, PhD Pamela Tucker, MD Suzanne M. Smith, MD, MPH Agency for Toxic Substances Betsy L. Thompson, MD, MSPH and Disease Registry National Center for Chronic Disease
Prevention and Health Promotion
Representatives of Other Organizations
Association of State and Territorial Health Officials
Cheryl Beversdorf E. Liza Greenberg, RN, MPH
Valerie Morelli William Fields Georgia Department of Patricia Nolan, MD
Human Resources Rhode Island Department of Health
Group Health Association of America
Carmella Bocchino, RN, MBA Sheila Leatherman Judith A. Cahill, CEBS United Healthcare Corporation
Bruce Davis, MD Diane Alexander Meyer Group Health Cooperative of
Puget Sound Clyde W. Oden, OD, MPH
United Health Plan George Isham, MD Health Partners Beauregard Stubblefield-Tave
Harvard Community Health Plan Jeffrey P. Koplan, MD, MPH Prudential Center for
Health Care Research
Health Care Financing Administration
William Taylor, MD, MPH
National Association of County and City Health Officials
Macmillian Baggett Grace Gianturco Gorenflo DeKalb County Board Nancy Rawding, MPH
of Health (Georgia)
Paul Wiesner, MD Virginia Caine, MD DeKalb County Board Marion County Health of Health (Georgia)
Advisory Committee to the Director, CDC
Steven A. Schroeder, MD Adela N. Gonzalez Robert Wood Johnson Foundation University of North Texas Health
Science Center at Fort Worth Martha F. Katz, MPA CDC/Office of Program Planning Margaret H. Jordan, BSN, MPH
and Evaluation Southern California Edison Company
Diana M. Bonta, RN, DrPH Charles S. Mahan, MD City of Long Beach Department of University of South Florida
Health and Human Services
Gilbert S. Omenn, MD, PhD June A. Flora, PhD University of Washington Stanford Center for Research in
Disease Prevention John R. Seffrin, PhD
American Cancer Society Harold P. Freeman, MD Harlem Hospital Center Eddie N. Williams
Joint Center for Political
and Economic Studies
The following CDC staff members prepared this report:
Jeffrey R. Harris, MD, MPH Office of the Director (OD) Randolph L. Gordon, MD, MPH Public Health Practice Program Office (PHPPO)
Karen E. White, MPA National Center for HIV, STD, and TB Prevention
Paul V. Stange, MPH
PHPPO Sabrina M. Harper, MS
The rapid, extensive changes in the health-care system in the United States provide public health agencies with new opportunities for prevention-oriented relationships with the private health-care system. Managed care organizations (MCOs) are rapidly becoming a major source of health care for the beneficiaries of both employer-funded care and of the publicly funded programs, Medicaid and Medicare. In addition, MCOs represent organized care systems that often focus their efforts on defined populations and are accountable for desired outcomes, including prevention activities. In recognition of the potential role of managed care in prevention, in January 1995, CDC formed a Managed Care Working Group to develop recommendations for CDC for fostering the incorporation of prevention practices into managed care. This report presents these recommendations and approaches for their implementation, as well as background and case examples.
In January 1995, CDC formed an agency-wide Managed Care Working Group to guide its efforts to foster partnerships between public health agencies at the national, state, and local levels and the rapidly growing managed care industry to promote prevention and improve the public's health. In March 1995, the Working Group initiated development of a prioritized list of activities for CDC, which then invited representatives of key groups -- including the Association of State and Territorial Health Officials, the Group Health Association of America (GHAA), the Health Care Financing Administration (HCFA), the National Association of County and City Health Officials, and the CDC Director's Advisory Committee -- to a series of consultations to review the proposed activities.
This report presents a) a brief summary of the systems for financing and delivery of health care in the United States, b) a review of the relationship between managed care and prevention, c) examples of the incorporation of prevention practices into managed care, and d) a list of the recommendations developed by the Managed Care Working Group for CDC's role in fostering the incorporation of prevention into managed care.
THE FINANCING AND DELIVERY OF HEALTH CARE
The financing and delivery of health care in the United States are rapidly evolving, and the term managed care covers a variety of arrangements that continue to be adapted and developed. Four entities are involved in the financing and delivery of health care: the individual consumer, the provider of care, the insurer who reimburses for care, and the purchaser of the care. This section provides descriptions of alternative arrangements for the financing and delivery of health care and focuses on the relationships among the four entities. The term managed care can include health maintenance organizations (HMOs), preferred provider organizations (PPOs), and utilization review. In this report, HMOs are referred to as the most fully developed managed care organizations and those most amenable to prevention initiatives.
The two broadest divisions of arrangements for financing and delivery are fee-for-service indemnity and prepaid health care. Under fee-for-service indemnity arrangements, the consumer incurs expenses for health care from providers whom he/she generally selects. The provider is reimbursed for covered services in part by the insurer and in part by the consumer, who is responsible for the balance unpaid by the insurer. Under indemnity arrangements, the provider and the insurer have no relationship beyond adjudication of the claim presented for payment, nor is there a mechanism for integrating the care the consumer may receive from multiple providers.
A variant of the fee-for-service indemnity arrangement is the preferred provider organization, which contracts with providers in the community to provide covered services for a discounted fee. Providers under contract are referred to as "preferred providers." Usually the insurer and the consumer pay less for services received from preferred providers than for those received from other providers. Generally, PPOs do not determine guidelines for preferred providers to follow.
Under prepaid health care arrangements, the insurer and provider functions are integrated under the HMO umbrella. Generally, the consumer agrees to use the HMO's providers for all covered health-care services. The HMO provides comprehensive and preventive health-care benefits for a defined population. It agrees to provide all covered health-care services for a set price, the per-person premium fee. The consumer may pay additional fees (co-payments) for office visits and other services used. The HMO also organizes the delivery of this care through the infrastructure it builds among its providers and the implementation of systems to monitor and influence the cost and quality of care. The risk for the cost of care for the enrolled population is assumed by the HMO.
Another common characteristic of HMOs is capitation, which is a negotiated amount that an HMO pays monthly to a provider whom the enrollee has selected as a primary care physician. The provider is responsible for delivering or arranging for the delivery of health-care services required by the enrollee. This capitation is paid regardless of whether the physician has provided services to the enrollee. In a capitation arrangement, the physician shares with the HMO a portion of the financial risk for the cost of care provided to enrollees.
HMOs establish their provider networks by following one or more model types, which are defined by the nature of the arrangement between the HMO and the provider:
individual consumers, has been used extensively in both fee-for-service indemnity and prepaid health-care arrangements. It is aimed both at improving the quality and decreasing the cost of health care.
In addition to individual consumers, providers, and insurers, the fourth important entity in the financing and delivery of health care is the purchaser of health insurance. Purchasers include individuals, employers, and governments at all levels. Employers and governments, because they purchase care for large numbers of people, can influence the development of benefits packages, including preventive services. In addition, these large purchasers can bargain for lower prices and ensure that systems are in place to monitor the access to, quality of, and satisfaction with care.
THE RELATIONSHIP BETWEEN MANAGED CARE AND PREVENTION
The rapid, extensive changes in the health-care system in the United States provide public health agencies with new opportunities for prevention-oriented relationships with the private health-care system (1). HMOs can play a powerful role in prevention for at least three reasons.
First, HMOs are rapidly becoming a major source of health care for the beneficiaries both of employer-funded care and of the publicly funded programs, Medicaid and Medicare. Enrollment in HMOs in the United States has grown from 6 million persons in 1976 to 51 million in 1994 (2). Enrollment grew by 11% in 1994 alone (2). This increase in managed care has been greatest in health insurance funded by employers. In 1994, only 37% of persons employed by organizations with greater than or equal to 10 employees remained in traditional fee-for-service indemnity plans; 23% were enrolled in HMOs (3). For employers with greater than 500 employees, health-care costs declined in 1994 for the first time in a decade; this decrease resulted almost entirely from a shift of health insurance from traditional fee-for-service indemnity plans to less costly managed care plans (3).
State governments also are converting to managed care for their Medicaid programs, which provide care to the poor and disabled (4). States have been particularly concerned about Medicaid beneficiaries' lack of access to primary-care providers and their overreliance on emergency room care, which lacks continuity and is expensive (5). In June 1994, 43 states, the District of Columbia, and Puerto Rico reported having at least one managed care program for Medicaid recipients (5). As of that date, 7.8 million (23%) Medicaid beneficiaries were enrolled in managed care, compared with 14% in 1993. Generally, states have established Medicaid managed care programs by obtaining one of two types of waivers from HCFA: Section 1915(b) freedom-of-choice waivers, which are generally restricted geographically, and Section 1115 research-and-demonstration waivers, which are statewide. Although interest in Section 1115 waivers has grown recently, 1915(b) waivers are more common: 38 states and the District of Columbia had 1915(b) waivers in October 1994 (5). The nature of the managed care arrangements under these waivers varies, from fee-for-service primary care case management (31% of enrollees in 1994) to fully capitated HMOs (51% of enrollees in 1994) (5). To date, Medicare beneficiaries, who are predominantly adults greater than or equal to 65 years of age, have been less likely to enroll in HMOs; however, in this age group, enrollment is also growing rapidly. As of December 1994, 9% of Medicare beneficiaries were enrolled in managed care. The majority, 7% of beneficiaries, were enrolled in fully capitated "risk" HMOs, and this proportion increased by 25% from 1993 to 1994 (6).
Second, HMOs historically have included prevention, and they maintain and continue to develop systems to measure performance and improve quality of services, including preventive services. Many HMOs use internal performance-measurement and quality-improvement systems such as Continuous Quality Improvement (CQI) to monitor, correct, and enhance their services. External systems of measurement and improvement are also imposed on the HMOs. One of these is the "report card," a set of measurements that an HMO uses to evaluate the quality of the service and care it provides. The best known of these "report cards" is the Health Plan Employer Data and Information Set (HEDIS) (7), developed jointly by HMOs, purchasers, and consumers under the guidance of the National Committee for Quality Assurance, an accrediting organization for HMOs. Of the nine indicators of quality-of-care in the most recent version of HEDIS (version 2.5), seven are preventive (8). These indicators include the incidence of low-birth-weight infants among the HMOs' enrolled populations and their utilization of vaccinations, mammography, screening for cervical cancer and cholesterol, prenatal care, and retina examinations for persons with diabetes.
Third, HMOs represent organized care systems that take responsibility for defined populations and are accountable to purchasers, individual consumers, and federal and state regulatory agencies for desired outcomes, including prevention outcomes. Many HMOs provide or are developing systems that promote and deliver preventive services rather than relying on individual providers, and the HMOs can be held accountable for the delivery of these services. In a recent study of Medicare beneficiaries enrolled in HMOs and traditional fee-for-service systems, cancers of the breast, cervix, and colon, as well as melanoma, were detected at earlier stages in the HMO enrollees (9). The cancers detected earlier were those for which screening and early detection are beneficial, and the authors attributed the earlier detection to HMO systems for screening. On the other hand, a recent review of the literature on Medicaid managed care indicates that, in most states, the delivery of preventive services neither increased nor decreased for Medicaid recipients after they were enrolled in a managed care plan (5).
The potential role of HMOs in promoting health and preventing disease is illustrated by three examples.
The Group Health Cooperative of Puget Sound (GHCPS) has recently summarized 20 years of its experience in primary and secondary prevention of disease (10). GHCPS is a large membership-governed, staff-model HMO with 486,000 members in Washington and Idaho. In 1978, GHCPS formed a Committee on Prevention and has since developed systematic approaches to programs in breast cancer screening, childhood vaccinations, influenza vaccinations for at-risk populations, smoking cessation and prevention, cholesterol screening, increased use of bicycle safety helmets by children, and detection and management of depression. Based on the Precede/Proceed Model (11), these programs operate at four levels: one-to-one in primary care, infrastructure, GHCPS organization, and community. The programs have demonstrated a 32% decrease in late-stage breast cancer (from 1989 to 1990); a vaccination completion rate of 89% among 2-year-old children (1994); a decrease in the prevalence of smoking in adults from 25% to 17% (from 1985 to 1994); and an increase in the prevalence of use of bicycle safety helmets among children from 4% to 48%, accompanied by a 67% decrease in bicycle-related head injuries (from 1987 to 1992) (10). Because several of the programs included community-wide policy interventions, the results may have extended beyond the GHCPS-enrolled population to the entire community.
United Health Plan, an HMO in Los Angeles, and its parent organization, the Watts Health Foundation, have recently described two prevention programs aimed at infant health (12). The Watts Health Foundation began in 1967 as a community health center and has served a predominantly poor population with both treatment and preventive services. The Foundation operates two divisions: United Health Plan, developed as an HMO in 1974, and a community health programs division. Of the 100,000 racially diverse members of United Health Plan, 65% are Medicaid beneficiaries, and approximately 35% are black, 35% Hispanic, and 10% Asian American/Pacific Islander. The community health programs division operates two community health centers, a geriatric center, a school-based clinic, and several community-based health promotion programs funded by both governmental and private sources.
The recently reported infant health programs are a breast-feeding program, operated in conjunction with the Women, Infants, and Children (WIC) program, and the "Healthy Black Babies" program, designed to decrease black infant mortality through use of media and outreach to promote early prenatal care. The breast-feeding program increased the prevalence of breast-feeding among WIC mothers from 7% to 30% in 2 years. As a result of the "Healthy Black Babies" program, United Health Plan's infant mortality rate among blacks has declined from 20 to 16 deaths per thousand births during the same time period.
CDC's National Immunization Program and the GHAA, the HMO national trade association, have formed a nationwide alliance to improve the vaccination status of preschool children. As a result of this alliance, individual HMOs are working with public health agencies and conducting CQI initiatives in the area of immunizations. In one example, CIGNA HealthCare of Maricopa County, Arizona, a staff-model HMO with an enrollment of greater than 205,000 members, applied the principles of CQI to increase vaccination rates in children less than 24 months of age. * Using the CQI process to clarify the root causes of difficulties in the process of providing immunization, CIGNA identified greater than 40 factors that could affect achievement of their goal of 90% completion levels of the full vaccination schedule for these children. After further analysis, these factors were classified into five broad categories of intervention: data collection and patient record system; provider education; parent education; parent incentives; and public-private partnerships, community outreach, and education. Focusing the efforts of the CQI team on these five areas resulted in the standardization of vaccination records, seminars for medical staffs working with children, use of incentive coupons, and improved informational materials and programs directed at parents and caregivers. After these comprehensive changes were implemented, the vaccination completion rate for 2-year-old children enrolled in CIGNA increased from 55% in 1992 to 73% in 1994.
WORKING GROUP'S RECOMMENDATIONS FOR CDC AND MANAGED CARE
As the nation's prevention agency, CDC is uniquely positioned to facilitate prevention practices through and with MCOs and can build on its established relationship with MCOs. For example, since 1993, CDC has worked with six HMOs with well-established health information systems to conduct research and demonstration projects on preventive services (13). In December 1994, CDC and the GHAA convened a conference ("Public Health Agencies and Managed Care: Partnerships for Health") (14), at which the approximately 150 participants from HMOs and public health agencies exchanged information and discussed future collaboration. In January 1995, CDC completed an inventory of activities with HMOs for fiscal years 1994 and 1995; the inventory identified 43 activities with a total annual funding of $17 million. In developing its recommendations for future activities, the Managed Care Working Group sought to build on CDC's base of experience and resources. The process employed by the Working Group included four stages: a) identification of assumptions about managed care; b) identification of issues -- both opportunities and barriers -- related to managed care and the public's health; c) development of a vision for CDC in relation to the managed care industry; and d) development of a prioritized list of recommended activities.
Summary of Assumptions, Opportunities, and Barriers Related to Managed Care and the Public's Health
CDC's existing vision statement, "Healthy people in a healthy world through prevention," needs no modification. The challenge to public health agencies is to work with MCOs, providers, purchasers, and consumers to make this vision a reality.
Recommended High Priority Activities for CDC
Prevention Effectiveness and Guidelines
Work with MCOs, purchasers, and state and local health departments in key areas of prevention effectiveness, including
implement Medicaid managed care arrangements that specify cost-effective preventive services for Medicaid populations and hold all managed care plans accountable for the delivery of these services. Examples of activities include
As several populations in the United States, including the Medicaid population, convert to managed care, CDC will undertake research to document the health effects of the reorganized systems that deliver preventive services. Examples of research topics include
Capacity Development in Public Health Agencies
As underserved populations are enrolled in managed care, bring MCOs and public health agencies together on common issues and help to refine the role of public health agencies. Examples include
prevention-related areas critical to partnership with and regulation of MCOs. Examples include community needs assessment, coalition-building, quality assurance, utilization management, and health services research and evaluation.
Recommended Priority Activities for CDC
Collaborate with MCOs and state and local health departments to standardize and improve their information systems so that these systems can be used for community-wide health assessment and surveillance of notifiable conditions, health determinants, and risk factors. Examples include
Assist in developing measures and other systems to monitor and ensure the quality of preventive services delivered by all providers. Examples include
Continue to build partnerships and mutual understanding among CDC, public health departments, MCOs, and purchasers through activities such as
In summary, the continuing evolution of the health-care system in the United States provides new opportunities for partnerships among MCOs, purchasers of health care, and public health agencies to foster prevention in the private health-care system. CDC has a key leadership role to play in this area, and its Managed Care Working Group has, in consultation with a broad spectrum of leaders in health care and public health, recommended a list of prioritized activities for CDC. As one of its first steps in implementing these recommended activities, CDC has designated a Managed Care Coordinator in the CDC Office of the Director. Readers who are interested in more information about CDC's activities related to managed care and prevention may call the Managed Care Coordinator's office at (404) 639-4500.
Best Practices, newsletter of the Group Health Association of America. Washington, DC: 1995, #2.
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