How Plans Influence Physician Practice Patterns

Plan for Today

• How Plans Influence Practice Patterns

• Team Meeting

(Framework )

Influencing Practice Patterns

• Selective contracting

• Use of gatekeepers

• Financial incentives

• Utilization review

• Profiling

• Clinical guidelines or protocols

The Goals:

• Reduce unexplained variation in treatment patterns

• Improve quality– Underuse, overuse, misuse

• Lower costs

What Do Managed Care Plans Do to Affect Care?

Remler et al.

Inquiry 34(3): Fall 1997

Financial Incentives

• Capitation• Risk/bonus pools for referrals and hospital• Penalties/bonuses for achieving performance

measures– Immunization rates– Mammography rates– Patient satisfaction– Productivity

Average share of physicians’ patients who are covered under different financial

arrangements (1995)

Financialarrangement

Allphysicians

PCPs Medicalspecialists

Surgeons

Capitation tophysiciangroup

13 18 10 10

Capitation toindividualphysician

8 9 5 7

Compensationlinked to use

16 17 14 16

Primary care physicians in managed care in California (1996)

• Financial incentives– Use of referrals (14%)

– Use of hospital (19%)

– Patient satisfaction (21%)

– Productivity (18%)

• Median earnings from bonus = 7% of net practice income

Grumbach et al. “Primary Care Physicians’ Experience of Financial Incentives in Managed Care Systems,” JAMA 339(21):1516-1521, November, 19, 1998.

Primary care physicians in California (1996)

• 58% of physicians with bonuses based individual and group performance

• 15% of physicians with bonuses based on individual performance only

Grumbach et al. “Primary Care Physicians’ Experience of Financial Incentives in Managed Care Systems,” JAMA 339(21):1516-1521, November, 19, 1998.

Utilization Review

“What percentage of the patients you see have health plans that review:– Your clinical decisions about the appropriate

site of care, including inpatient, outpatient and emergency room care?

– The content of your diagnosis or treatment decisions to assess appropriateness?

– The length of hospital stays of your patients?”

Remler et al.

Average share of physicians’ patients who are subject to managed care techniques (1995)

Technique Allphysicians

PCPs Medicalspecialists

Surgeons

Site of care 45 45 40 49Length ofstay 59 58 56 62Treatmentappropriate-ness

39 38 34 43

Utilization review denials: Percent of patients for whom recommended care denied coverage

First-rounddenial

DenialReversed

Overalldenial rate

Hospitalization 3.4 67 1.0

Surgery 3.7 65 1.2

Referal to specialistof choice

5.7 57 2.6

Substance abuse(referral of choice)

4.2 39 2.8

Mental healthreferral

5.8 52 3.0

“For what percentage of all the patients you see

• Are you provided with profiles of your clinical activity to identify outliers in the use of services, diagnoses, and/or treatments?

• Are there condition-specific protocols or guidelines for physicians to use in making diagnoses or prescribing treatments?”

Remler et al.

Average share of physicians’ patients who are subject to managed care techniques (1995)

Technique Allphysicians

PCPs Medicalspecialists

Surgeons

Profiling 16 22 21 13

Protocols 16 17 12 16

Limitednetwork

25 29 24 23

Physician profiles

Spock McCoy Who

Referralsper 1000

12 11 15

Admissionsper 1000

5 6 10

Lab $ perpatient

$353 $375 $469

Issues in Profiling

• Sufficient patient volume– So that differences not just due to random

variation

• Case-mix differences

• Information system requirements

Physician Adherence to Protocols

• Perceived legitimacy– Expert consensus– Based on scientific evidence– Involvement of local physicians

• Perceived purpose– Quality– Cost

Physician Adherence to Protocols(cont.)

• General dissemination not effective– Announcements– Conferences

• Requires active strategies, in combination– Participative workshops– Outreach visits (academic detailing)– Patient involvement– Reminders or audit with feedback

HMO Market Structure and Performance: 1985-1995

Wholey, Christianson,

Engberg and Bryce

Health Affairs 16(6): Nov/Dec 1997

Hospital Days and Ambulatory Visits for Non-Medicare Enrollees

Year Hospital Days per 1000 Ambulatory visits permember

Group IPA Group IPA

1985 353.46 400.14 4.45 4.76

1995 254.96 263.67 5.22 5.53