Staff Model HMOs Research Articles

Quality and customers: a planning approach to the future of mental health services in a health maintenance organization.

Mental health service delivery is both a health care and business arrangement, and is accordingly impacted by national changes in both areas. HMO mental health services in the current health reform zeitgeist are being called on to provide more efficient, comprehensive integrated care. A planning effort is presented which is organized around (1) a quality improvement effort aimed at understanding who are the "customers" (patient, medical community, mental health staff, and client employer) and what they need and (2) coordination and integration with the HMO larger organizational plan and efforts. The unique benefits of staff model HMOs are discussed relative to mental health service.

Managed Care: The Burden of a Great Potential

One of the major difficulties in evaluating the performance of managed care Organizations (MCOs) is the growing scarcity of pure model types amidst the current explosion of delivery arrangements. The managed care movement had its origins in group-and staff-model HMOs; they were presented as options to traditional indemnity insurance plans. The HMO's goal was to be offered by as many employers as possible; some made use of federal mandating provisions contained in The HMO Act of 1973. But, choices to the employee were fairly straightforward: smaller networks and restrictions on access to specialists versus open access in the traditional indemnity plan, minimal out-of-pocket costs in the HMO versus the uncertainty of indemnity coverage (coinsurance, deductibles, annual/lifetime benefit limits, etc.), and premium differentials or, what is more relevant, the employee's contribution to the premiums of the competing plans. The employee made some assumptions about future health care needs and chose a plan for the upcoming year. That was managed care in the olden days. Now, it is a researcher's nightmare to differentiate characteristics among the present range of MCOs. Group/staff-model HMOs have expanded to embrace community physicians; many have rapidly expanded their provider networks to include large multispecialty groups and a wide assortment of single specialty and smaller multispecialty group practices. Traditional HMOs and newer network-based MCOs offer subsets of networks within networks! A second feature contributing to the difficulty in evaluating MCO performance is the complication of benefit differentials and employee cost-sharing features. Particularly for PPO plans, it is an actuarial nightmare to develop benefit equivalents for the almost infinite menu of copayment, deductible, and coinsurance differentials. Moving from an annual deductible of $100-$500 not only has a dollar-for-dollar offset but a significant utilization deterrent as well. Added to this confusion is the recent growth of flexible spending accounts and cafeteria plans, so that the employee's cost-sharing burden is muddled even further. The authors note that several studies have demonstrated the cost-containment success of the traditional group/staff-model HMO. Group/staff-model HMOs have also proven that they can deliver quality medical care with patient satisfaction results comparable to fee-for-service indemnity insurance. However, the research also indicates that employers, after 40-50 years of HMO experience, continue to believe this cost-containment success is due to HMO selection of healthier members. This perception remains a major concern for managed care generally, as it provides fuel for the skeptics in their criticism of managed care as a public policy direction. It is very disappointing that evaluation research studies have not dealt with the issue more successfully. Employer perception that HMOs attract younger, healthier employees is strongly felt, as referenced in the Foster Higgins studies. Only 41 percent of employers think that HMOs actually control health care costs, which contributes to the ongoing dilemma facing managed care: does managed care work or not? Also contributing to employer skepticism, particularly directed at group/staff-model HMOs, is a philosophical opposition to first-dollar coverage. The early group/staff-model HMOs created organized delivery systems, and they originated the concept of comprehensive, first-dollar coverage. The authors note that the RAND study demonstrated cost-containment success through reduced utilization in the staff-model HMO when compared to free fee-for-service plans. There was another equally important conclusion in evaluations among the fee-for-service cost-sharing plans: There were significant reductions in utilization associated with the imposition of even modest office visit copayments. Many employers and most employee benefit consultants prefer to use employee cost sharing as a means to reduce utilization to make the employee a more responsible consumer. …

Economic Incentives in the Choice between Vaginal Delivery and Cesarean Section

The dramatic rise in cesarean-section (C-section) rates, and their high costs and wide variation, has raised interest in understanding the factors affecting decisions to use this procedure. The economic incentives of physicians, hospitals, payers, and mothers are examined. In the economic framework, physicians must balance their short-term interests against their reputation, which is derived from efficiently providing what mothers want. Providers who encounter higher opportunity costs while attending to mothers in prolonged labor can reduce these costs by operating or by restructuring their practices. The mainly indirect evidence on financial incentives indicates that insured mothers have low marginal financial costs when they undergo C-section. Mothers with private, fee-for-service insurance have higher C-section rates than mothers who are covered by staff-model HMOs, who are uninsured, or who are publicly insured. In conclusion, research and payment reforms to reduce distortions to good practice are proposed.