Prepaid Group Practice Plan Research Articles

The who, what, and how of managed care.

Since the early 1970s, policy makers and researchers alike have been eagerly watching and evaluating the growth of so-called managed care plans. Many expected prepaid group practice plans (PGPs), then individual practice associations (IPAs), then preferred provider organizations (PPOs), and a host of other insurance arrangements under the managed care label, to result in a more efficient allocation of resources. Others predicted that these changes from the traditional indemnity insurance plans would lead to the denial of needed care and a reduction in the freedom of choice, both for providers and patients. It is a major problem to determine whether either change has taken place because most policy makers and researchers have been less than clear about who or what these plans are supposedly managing, much less how they are managing it. What is this phenomenon called managed care that has elicited so much hope and fear? The confusion exists in part because researchers have used managed care as “the shorthand label for a wide variety of health plans” (Prologue 1999) with “little consensus regarding labels and few accepted criteria for categorization” (Weiner and de Lissovoy 1993: 75). Some might argue that the label is unimportant. However, without knowing what the term managed careis encompassing, how do we know what it is that physicians are presumably revolting against? (see, e.g., Rosenberg 1998; and Ginsburg 1997). Is it “the entire range of utilization control tools that are applied to manage the practices of physicians and others, regardless of the setting in which they practice?” (Weiner and de Lissovoy 1993:

The use of medical services under prepaid and fee-for-service group practice

This study compares medical care use under two prepaid plans offered to the same group of employees and their families. One is a Kaiser plan under which all care is provided on a prepaid basis by a closed panel group practice, and hospital care is provided in hospitals owned by the Kaiser system. Thus physicians are at risk for the entire costs of the covered services of their enrollees. Under the other plan. Clinic plan for short, physician services and outpatient ancillary services are provided by a large, predominantly fee-for-service group practice while hospital care is covered by a Blue Cross policy incorporated into the plan. Thus physicians under this plan are not at risk for the hospital costs of their enrollees and, since prepaid patients are such a small percentage of their total patient populations and they usually do not know if a patient is prepaid or fee-for-service, they are unlikely to treat their prepaid patients differently from their fee-for-service patients. Our findings show that with minor exceptions, the pattern of medical care use under the two forms of group practice is strikingly similar. (1) The rate of ambulatory care is much the same, averaging 2.97 physician visits per year for Kaiser members and 3.05 for Clinic members. (2) There is no significant difference in the rates of patient-initiated visits and physician-initiated visits, either in terms of visits per plan member or per episode of illness. (3) Most important, hospital use under the two plans is practically identical. The age-sex adjusted number of hospital days per 1000 personyears is 249.8 for Kaiser members and 250.7 for Clinic members. These rates are low not only compared to the national rates and rates under alternative insurance plans but also compared to some other prepaid group practice plans. The few differences which do exist are minor. Clinic members are somewhat heavier users of preventive services and of some outpatient ancillary services, notably laboratory tests used in preventive care and to a lesser degree. X-rays. But the overall picture which emerges is one of great similarity between the patterns of use under the two plans. We hypothesized that the conservative use of hospital as well as of ancillary and of physician-initiated services under fee-for-service group practice is due largely to the control over the supply of physicians exercised by the group, which is unlikely to add physicians unless all its members are fully occupied.

A unique approach to mental health services in an HMO: indemnity benefit and service program.

Three years' experience with a unique combination of an indemnity benefit plus an in-house service program in a prepaid group practice plan's psychiatric department demonstrates enhanced accessibility and increased utilization among formerly unserved segments of the membership plus the flexibility of freedom of choice in choosing service provider and the ability to tailor treatment to patient needs. Overall costs were similar to those reported for other prepaid plans despite the addition of benefits for long-term therapy outside the plan. Flexible use of inpatient and day hospital services enabled the program to migrate, to a large extent, major increases in hospital charges while providing greater continuity of care. This combination of benefits offers the advantages of both an indemnity benefit (Freedom of choice in treatment) and an in-house service program (greater continuity of care, more flexible use of resources, reduction of reliance on hospital care).

Use of hospital services under two prepaid plans.

This study compares the use of hospital services under two prepaid plans offered to Stanford University employees and their families. One is a Kaiser plan while under the other (Clinic plan), physician services are provided by the Palo Alto Medical Clinic, a multispecialty, largely fee-for-service group practice, and hospital services are covered by a Blue Cross policy. Using age- and sex-adjusted data, the hospital admission rate excluding deliveries is higher under the Clinic plan (44.2 admissions per 1,000 personyears compared with 38.2 under the Kaiser plan), but hospital days per 1,000 personyears are almost identical (249.8 days under the Kaiser plan, 250.7 under the Clinic plan). The difference in the admission rates is due to the higher surgical admission rate under the Clinic plan (32.4 admissions per 1,000 personyears compared to 25.0 under the Kaiser plan). However, when surgical procedures performed in the hospital on a nonadmission basis are added to surgical admissions, the surgical rates under the two plans become very close (35.7 admissions and procedures per 1,000 personyears under the Kaiser plan and 37.6 under the Clinic plan). This lends some support to the hypothesis that the lower hospital surgery rates found under prepaid group practice plans may be due as much to the group practice form of their organization as to their prepaid feature. The authors offer some possible reasons why surgeons in fee-for-service group practices may have relatively low surgery rates even though they do not have the incentive to hold down costs which surgeons in prepaid group practices have.

Mental health services for Medicaid enrollees in a prepaid group practice plan

The authors present the patterns of utilization of mental health services of a low-income population in a prepaid group practice setting, the Health Insurance Plan of Greater New York (HIP). Over a 6-year period, utilization rates for psychiatric consultations and mental health services by Medicaid enrollees rose to equal or exceed utilization by employed groups. The authors also provide evidence that psychiatric treatment reduces the use of other physician services, especially X-ray and laboratory services.

A causal model of health services for diabetic patients.

A causal model of health services which includes patient and provider variables, perceived access to care, utilization of services, continuity of care, technical quality of the care process, technical quality of the care outcome, and patient satisfaction is applied to a group of diabetic patients enrolled in the Seattle Prepaid Health Care Project. The enrollees received comprehensive health services at zero out-of-pocket cost from either a prepaid group practice plan or an independent practice plan. Surveys were periodically conducted to determine health status, satisfaction, and demographic characteristics of the enrollees; utilization of services was monitored throughout the experiment. The causal model is operationalized through the use of path analysis. Significant relationships (p less than or equal to .10) were established between satisfaction and perceived access to care, family size, sex, and professional qualifications of the provider; between outcome of care and health status, female education, and physician performance; between physician performance and professional qualifications; between continuity of care and health status and female education; between utilization and perceived access, specialty of provider, and provider system; and between access to care and provider system. The policy implications of the results are discussed.

Cost, utilization, and utilization review of mental health services in a prepaid group practice plan.

The author describes the utilization review process, utilization patterns, and service cost of the Mental Health Service of the Health Insurance Plan of Greater New York (HIP). He finds that a mental health care delivery system within a health maintenance organization offers the advantages of sophisticated utilization review procedures, reduced cost per mental health incident, and a low utilization rate and low cost for psychiatric hospitalization. However, the HMO's return-to-function treatment goals may be too limited for the minority of patients who would benefit only from long-term intensive treatment. He recommends that cost accounting be based on cost per illness rather than cost per service.

Prepaid group practice under universal health insurance in Canada.

This paper describes the experience of the two prepaid group practice plans in Ontario before and after universal health insurance. Both plans were capitalized, before national health insurance, by member contributions and both have had persistent problems with enrollment constraints and professional opposition. The Sault Ste. Marie Plan began in 1963, six years before Canadian medicare. The plan was paid a capitation fee for medical services but did not share in savings from its reduced hospital use. After universal insurance sharing in decreased hospital use was offset by regulations which allowed plan members to use non-plan physicians at Plan expense. Payments to non-plan physicians now take up 20 per cent of Plan income. Active enrollment of members has been replaced by a Ministry of Health registration system which is based on overall utilization. The St. Catharine's Plan began at the same time as universal insurance in 1969. Its out-of-plan use averaged about 40 per cent of total income. Most recently this program has shifted from capitation to cost-reimbursement payment. In Canada present trends include cost containment, financing by general tax revenues rather than premiums and increased categorical benefits. Under Canadian universal health insurance prepaid group practice has an uncertain future.

Ideological goals of different health insurance plans.

Questionnaires sent to and interviews with managerial personnel in two types of health insurance organizations revealed substantial differences in their goals. Top policy makers, executive managers, and lower level management personnel (in all 165 people from four entities) were questioned. Although differences occurred among the various administrative levels, the commercial companies were more strongly oriented toward profit and growth and the prepaid group practice plans more strongly oriented toward service and community relations. These findings were confirmed by a study of the public statements of these organizations. The findings would seem to have relevance to the use of insurance companies by the government in implementation of any national health insurance program.

Health Insurance Plans: Promise and Performance

Hetherington et al examine the differences between provider-sponsored plans, commercial carriers, and prepaid group-practice plans in southern California, basing their work on data collected from six plans in Los Angeles County, from 1965 to 1971. Information was gathered from the health insurance agencies, subscribers to each plan, and physicians who served the subscribers. Performance of the plans was measured according to amounts of medical service used, aspects of quality of those services, consumer expenditures, and consumer satisfaction. There were lower hospitalization rates in the large group-practice plans. Group plans tended to provide more preventive services and do more laboratory and radiology testing, but physicians in the large group plan "do not make note of the results as frequently as their colleagues in private practice." The hospital-sponsored plan had the highest rate of continuity of care. Families in the large group-practice plan had significantly lower out-of-pocket expenses per person while the

An adaptive social systems model of a prepaid group practice plan.

In the present study, an adaptive social systems model is developed and utilized to examine the dynamic properties of a health services delivery system. The model employs a Markov chain as a structure for analyzing the utilization of physician services both inside and outside of a prepaid plan. Four system states are defined, namely, no use, inside use, outside use, and both inside and outside use of physician services. Subscribers are considered to be in one of these states on each episode of illness. Transition probabilities are estimated from data collected from a sample of subscribers to a university health plan using a regression approach that permits a heterogeneous population to be examined within a Markovian framework. This framework is used to examine factors that account for differences in utilization patterns among individual subscribers and to examine overtime changes in the transition probabilities resulting from population shifts on specific demographic and health-related attributes. Based on the assumption that individual subscribers rather than the population as a whole follow a Markov process, the k-step transition matrix is constructed for the heterogeneous subscriber population and is used to examine the long-run effects of particular utilization patterns on the functioning of the prepaid plan.

Consumer Satisfaction with Prepaid Group Practice: A Comparative Study

RICHARD TESSLER DAVID MECHANIC University of Massachusetts, Amherst University of Wisconsin, Madison This study compares reactions of consumers to participation in prepaid group practice and alternative health insurance plans in a large metropolitan area. The majority of respondents in the survey were very satisfied with the medical care they and their families received during the preceding year. However, prepaid practice respondents expressed relatively less satisfaction than persons participating in alternative insurance plans. Degree ofsatisfaction wasfound to be related to characteristics of consumers, such as being unmarried, low skepticism toward medical care, psychological well-being, and perceived positive health status. When all correlates of satisfaction were controlled, being in the prepaid group continued to have an independent effect on degree of dissatisfaction. When questioned about their perceptions of the accessibility of medical care, prepaid practice respondents reported greater difficulty in obtaining appointments and longer travel time to site of care than persons participating in alternative insurance plans, but shorter waiting time upon arrival at the doctor's office. Perceived barriers to access were positively associated with consumer dissatisfaction.

The Health Maintenance Organization Act of 1973 (P.L. 93-222) and Prepaid Group Practice Plans

Passage of the 1973 Health Maintenance Organization Act (P.L. 93-222) represents a significant effort by the Federal government to experiment with organizational change in the structure of the health care delivery system. The history of the bill is briefly reviewed. The most important sections of the bill are analyzed from the perspective of an existing prepaid group practice plan. The author concludes that the bill contains sufficiently stringent requirements that it will not result in a major increase in the number of Health Maintenance Organizations unless similar requirements are imposed on other private insurance carriers. Furthermore, significant allowance for "phasing in" will be required for the existing prepaid group practice prototype plans to qualify for Federal certification.

Pediatric-child psychiatry collaboration in a health maintenance organization.

The author describes a collaborative program between the child psychiatry and pediatric services of a prepaid group practice plan that included weekly meetings between the psychiatrist and the pediatric staff, meetings also involving other disciplines, and clinical evaluations of referred patients. The advantages of this kind of approach, especially its educational and preventive aspects, are described, and it is proposed as a possible model for interdisciplinary work that will help realize the goal of comprehensive health care.

Utilization and cost experience of low-income families in four prepaid group-practice plans.

Abstract A number of low-income families through arrangements supported by the Office of Economic Opportunity received medical care through four community-based prepaid group-practice plans. These families required six months to achieve a utilization level not exceeding that of the regular-plan members. As compared to national data, costs were less because of reductions in hospital days for the poor under prepaid group-practice arrangements. The average number of inpatient days per 1000 Office of Economic Opportunity enrollees was 600 days under the group plan; the national average for low-income persons under the age of 65 was about 1000 days. Cost differences between the low-income families and the regular-plan members were minimal when similar benefits were compared. A package of services including comprehensive physician services, prescriptions, mental health and hospital services cost from $137 to $180 per person per year. Support of broader health services may add from $47 to $65 per person per year to the cost. (N Engl J Med 289: 67–72, 1973)

Prepaid group practice in Sault Ste. Marie, Ontario. II. Evidence from the household survey.

This is a report on the household survey component of the study at Sault Ste. Marie, Ontario, exploring differences in medical care behavior between steelworker families in a prepaid group practice plan and those enrolled in an insurance company plan. Both were eligible for broad medical benefits and, through the provincial program, for unlimited hospital care. The survey was conducted from July 1967 through June 1968. Demographically similar, the study populations reported no significant differences in such indices as the incidence of acute illness, disability due to either, medical attendance in illness, and attitudes toward seeking medical care. Differences, confined to interactions with the health care system, included for group health plan members, concentration of services at their health center, with lesser use of hospital or other facilities in primary care; evidence of greater continuity of care in the insurance plan population as measured by care through usual physician, and substantially higher rates of hospitalization and surgery among the insurance plan participants. With the focus on hospitalization, comparisons are drawn as between certain data obtained through record analysis and those obtained through interviews, with a considerable degree of mutual validation of the two methods being revealed.

Prepaid group practice in Sault Ste. Marie, Ontario. I. Analysis of utilization records.

One year's utilization of medical and hospital services by some 3,300 Canadian steelworkers and their families who belonged to a prepaid group practice plan has been compared with utilization by the families of fellow members of the same union Local whose care was provided by independently practicing physicians. Although the group practice had no financial incentive to economize on inpatient care, its rate of hospital utilization was lower by about a quarter. On comparing the frequency of different types of service rendered under the two systems, it appeared that the group practice placed somewhat greater emphasis on health protection against the investigation and treatment of disease, but utilization of both laboratory and radiologic services was certainly higher in the population served by the group practice.

The Prepaid Group Practice Plan in the Education of Future Physicians

The accelerated development of Health Maintenance Organizations on a broad scale is being encouraged as a method of improving and rationalizing services in the American health care system. Prepaid group practice plans can also serve as an important resource for training future primary care physician

Use of Mental Health Services by Poverty and Nonpoverty Members of a Prepaid Group Practice Plan

Dr. Weiss is associate professor of sociology and urban studies, Portland State University. Dr. Freeborn is associate director and Ms. Lamb is research assistant at the Health Services Research Center, Kaiser Foundation Hospitals, Portland. This research was supported in part by grants HS 0023 and CH 00235 from the Department of Health, Education, and Welfare and by the Kaiser Foundation Hospital's Community Services Program fund. Tearsheet requests to Sara Lamb, Kaiser Foundation Hospitals, Health Services Research Center, 4708 S.E. Hawthorne Blvd., Portland, Oreg. 97215.

A Critique of "Manpower Needs by Specialty"

In Manpower Needs by Specialty, Mason 1 has attempted to demonstrate that the problem of the medical service bottleneck is not reflective of an absolute shortage of medical manpower, but rather reflects an imbalance in the distribution of physicians. Imbalances relating to geographic location and distribution within specialties have been cited as main areas of concern and as focal points around which further research must be directed. To emphasize this point, tables were constructed containing physician-to-population ratios in selected prepaid group practice plans and in each of the 50 states. Although physician-to-population ratios have been used in several studies in the past to reflect the overall level of physician supply, 2,3 there are inherent limitations with such use. The main area of contention is that information about what does exist does not provide answers about what should exist. Ratios are often used as measuring sticks to determine whether a particular