The Public Policy Institute

Managing With Care

Section 3

Managed Care Means Quality Care

In July 1993, concerned about the rising cost of her health insurance plan, Charlotte Stone of the Bronx joined Oxford Health Plan. After her first physical with her new family doctor that September, she had some bad news: a left ventricular mass, the size of a golf ball, was growing inside her heart. Extremely rare, the condition is sometimes fatal.

"I was frightened and upset," recalls Ms. Stone, a retired advertising executive. "I had no close relatives in the area and lived alone. I totally relied on my primary care physician, his staff, and the surgeon for support and comfort. We always discussed the different tests and procedures that they would perform. I never had the sense that people were making decisions for me."

Oxford put Ms. Stone in contact with a number of specialists—each of whom, she says, "already knew me as a patient. They had my charts and were completely aware of my condition."

Her extensive treatment, including successful surgery, changed her mind about managed care.

"I cannot say enough about the level of care I received from Oxford," Ms. Stone says. "I was very negative about managed care before joining. I believed HMOs were only concerned about cost cutting and that I would never get the care I needed."

Now, she says, "I feel like shouting from the rooftop that you've got to join managed care. The truth of the matter is that I receive better care now than ever before. My HMO really pushed the annual physical—it was there that the mass in my heart was first discovered. I might not be alive today if it wasn't for their strong belief in preventive care programs."

From the very beginning, the philosophy of managed care related to quality and cost control—as well as to the realization that keeping costs in check is absolutely essential, if quality coverage is to be widely available.

The first health maintenance organization was sponsored by both business and unions, to provide care for laborers who were building an aqueduct in Southern California's Mojave Desert. Several managed-care organizations now thriving in New York State trace their roots to employer-union health plans. All of these plans focus on both restraining costs and improving quality. The same is true of other managed-care plans—from the New York State employees' plan, designed by unions and management, described earlier in this report, to for-profit HMOs run by major national corporations.

Some critics say, though, that managed-care organizations and the big businesses that are their most influential customers are focusing too much on costs—and not enough on quality of care.

That's false. And it's especially ironic, given the history and current realities of managed care. The facts are these:

The broadest, most detailed examination ever made of managed care nationwide was published in October 1997 by the National Committee for Quality Assurance, an independent body of employers, consumer groups and others which monitors and accredits health plans. NCQA said its reviews of more than 300 health plans across the country show that "managed-care enrollees, in general, are satisfied with the care they receive through their health plans."

The quality assurance organization reviewed eight essential services such as advising smokers to quit, screening for breast cancer and immunizing children. Its report notes variation among managed-care organizations in use of preventive care, member satisfaction and other indicators, and says most organizations need to do a better job of providing information. Still, it adds: "On these particular measures, the performance of managed-care plans is as good or better than that of fee-for-service insurers."

Managed care shifts the focus of health plans "from input to outcome," in the words of Jill Kanin-Lovers, vice president for Global Human Resources Operations at IBM Corporation. "Services in an indemnity system were evaluated on the basis of the input—the volume and type of service provided—without being able to know the ultimate impact on the patient's health," Ms. Kanin-Lovers points out. By contrast, service integration and improved record-keeping in managed care allow health professionals "to manage and evaluate patient care on the basis of whether the patient's condition improves."(1)

The best of care in New York

Health experts are unanimous in saying health education is a key step toward better health for all. And health education is a central mission of managed-care organizations.

HMOs typically offer a wide variety of programs that encourage participants to adopt healthier lifestyles. For instance, Blue Choice, the health maintenance organization of Finger Lakes Blue Cross and Blue Shield, provides:

Capital District Physicians' Health Plan provides hundreds of health-related messages available to anyone with a telephone, through the Albany Times Union's "Healthline" service. Callers can request messages, typically two minutes or so, on topics ranging from recognizing a heart attack, to preventing food poisoning, to making bicycle riding safer. Some other managed-care plans have similar services.

Managed-care organizations are also uniquely able to provide high-quality care of a comprehensive nature—which can be extremely important in cases involving life-threatening illnesses. Charlotte Stone's experience with treatment for a heart problem is one example.

Such comprehensive care is known as case management, and it's exactly what patients need when faced with the often overwhelming prospect of a serious illness. Case management is another feature little known under traditional health plans, and one of the most valuable innovations of managed care.

Other typical features of managed-care organizations can engender better health. For instance, a 1994 study found that patients hospitalized for appendicitis were more likely to suffer a ruptured appendix if they had traditional fee-for-service health insurance (or Medicaid, or no health coverage) than if their coverage was the capitated type common in HMOs.

A report in The New England Journal of Medicine said large staff-model HMOs "often provide urgent care facilities that are separate from the hospital emergency room; such facilities may increase the likelihood of an early evaluation for abdominal pain."(2)

Most managed-care organizations run quality assurance programs that encourage physicians and other providers to adopt best practices of care. Judy Gemmer, a registered nurse who serves as quality assurance supervisor for Independent Health, began performing quality reviews of provider offices three years ago. With years of experience in maternity nursing, she recommended that all providers treating pregnant women in their offices maintain emergency equipment in case of sudden, unexpected deliveries.

After using that equipment to deliver a baby in his office in 1996, Dr. Stuart W. Maisel wrote Independent Health: “Thanks to Mrs. Gemmer from your QA department, we were prepared for such an eventuality and what could have been a very dangerous situation was very manageable...I never had had a patient deliver in my office before and felt that this measure was not necessary, but I implemented it to comply with IHA's wishes. I am most thankful that I did...”

Even the element of managed care that tends to draw the most criticism—limiting coverage of some treatments, so that our limited resources for health care can be used where they will do the most good—can have direct medical benefits, as well.

"Study after study has documented the routine use of unneeded and even dangerous treatments," journalist and health analyst Michael L. Millenson writes in Demanding Medical Excellence, one of the most heralded new books about the transformation of modern health care. "Harvard University researchers, for example, found that one-quarter of the heart bypasses, angioplasties, and catheterizations (measuring blood flow and blood pressure in the heart) performed on elderly heart attack victims are unnecessary." Millenson adds: "During the Baby Boom years of 1950 through 1955, some two hundred to three hundred children under age fifteen died annually from anesthesia, postoperative hemorrhaging, and other effects of tonsillectomies. The surgery itself was probably unnecessary; these children's deaths were a tragic waste."(3)

Obviously, preventing needless and even dangerous medical procedures is a good thing—another benefit of managed care.

Measuring quality of care

By definition, HMOs and other managed-care plans maintain centralized systems of information about their participants, the treatments those individuals receive, and the doctors and others who provide treatment. That makes it possible to subject managed-care organizations to far more scrutiny than has ever been considered for traditional health plans.

And that closer scrutiny is indeed taking place. It gives consumers dramatic new insights into the quality of care their health plans provide, and creates tremendous new pressure on providers to meet ever-higher standards of quality.

Across the country, much of that new pressure comes from the National Committee for Quality Assurance. A nonprofit organization, NCQA is governed by a board with members representing corporations, unions, consumer groups, managed-care organizations, the American Association of Retired Persons and medical professionals.

NCQA accredits managed-care plans in the same way the Joint Commission on Accreditation of Healthcare Organizations, for example, does hospitals. Accreditation from NCQA means a health plan has demonstrated a deep commitment to the highest standards of medical excellence and continuous improvement in quality of care. (A listing of NCQA-accredited managed-care plans in New York State appears as an Appendix to this report.)

Quality improvement standards—including coordination of care, provision of access to care in a reasonable time, and demonstrable improvements in care and service—account for 40 percent of a managed-care organization's overall score in the accreditation process. Physician credentials—review of participating physicians' training and experience, history of malpractice or fraud, and current performance—account for 20 percent. Preventive health services make up 15 percent of the score. Members' rights and responsibilities, utilization management and medical records account for the remainder.

NCQA accreditation surveys are conducted by teams of physicians and managed-care experts. A national oversight committee of doctors analyzes the team's findings and assigns one of four possible accreditation levels (full, one-year, provisional or denial). Accreditation is not easy. Only 17 of the 50 or so managed-care plans in New York State were accredited as of October 1997, according to NCQA. Another half-dozen were awaiting review results or in the application process.

For the first time, good data on quality

NCQA's assessment of health plans also includes a second major tool—the Health Plan Employer Data & Information Set (HEDIS), the common set of data that health plans are asked to provide for measurement of their quality of care. Collecting such statistics gives the organization the most comprehensive database of information about managed-care plans available, with more than 330 health plans that cover three-quarters of all HMO enrollees nationwide.

Through NCQA, employers and individuals can find out, for instance, what percentage of children in a health plan received appropriate immunizations by their second birthday, or whether doctors in the plan do an effective job urging women between the ages of 52 and 69 to undergo recommended screening for breast cancer.

The HEDIS measurements will soon go even further. Health plans will be required, for instance, to give enrollees over age 65 a 36-item questionnaire on whether they feel better or worse than they did a year earlier. And managed-care organizations will have a uniform survey of member satisfaction that will allow valid comparisons of one plan to another.

As most people in the business world know, what gets measured tends to get done. So NCQA's measurement system instills in health plans a Total Quality Management-type approach to care, including a strong commitment to continuous improvement. For many employers—particularly larger corporations, which typically have a high level of expertise in managing health benefits—managed-care plans now compete based on quality as much as, if not more than, on price.

And the broader health-care marketplace—hospitals and networks of providers—is also starting to compete with managed care, by offering more preventive care, health education and other services that will improve patients' overall "wellness." That competition both within and outside the managed-care industry may be the most powerful, long-term tool for improving health care.

"An HMO that doesn't report the data NCQA suggests it report will not survive in today's marketplace," says Helen Darling, manager of international compensation and benefits for Xerox Corporation and co-chair of the NCQA committee that drafts HEDIS criteria.

"Americans with company-sponsored benefits are headed toward a day, not so far away, when the medical care they get will be considerably better than it was in the days of traditional indemnity insurance," Business Week reported. "And better medicine will be cheaper."(4)

IBM's Jill Kanin-Lovers points out managed care shifts the concept of quality from "static quality" to "dynamic quality": "Quality in an indemnity system was a state of practice that remained unchanged once attained—it was a function of the physician's training or the character of the health-care facilities. The shift to organized service delivery with performance and outcome measures has made quality a constantly evolving goal. Providers are encouraged to share information, learn from their collective experience, rethink their practices, and respond to new guidelines and protocols."

In other words, as the marketplace forces managed-care plans to compete on quality, health care will improve—meaning participants' health will improve.

Even the harshest critics of managed care admit the growing focus on quality—an emphasis that simply never existed under traditional health insurance plans—is a good thing.

Like many physicians who have seen new limits placed on their authority and income, neurologist Dr. Lewis P. Rowland bitterly criticized the "excesses" of managed care in a recent professional journal commentary. Still, he acknowledged: "There are some beneficial aspects of managed care. ... Attempts to measure quality of care surely enhance our goal of effective and humane care." (5)

NCQA's accreditation process and its HEDIS data system are complicated enough that, at present, only major employers with sophisticated human resources managers tend to take advantage of it. Still, the data are easily available to employers and consumers (for instance, at http://www.ncqa.org). They are the basis for detailed reports by more and more general-interest publications, such as U.S. News & World Report's "America's Top HMOs" report.(6) And NCQA is already taking steps to make its work even more easily accessible, via one-page Accreditation Summary Reports on health plans and other steps.

New York State's own analysis

Unlike residents of most other states, New Yorkers are fortunate enough to have a second major source of information about managed-care plans. The state Health Department recently released its second annual analysis of managed-care plans' quality.(7)

The report is intended to "provide meaningful and valid evaluations of quality performance for quality improvement and public accountability," Commissioner DeBuono said. The Health Department uses data in the report to work with health plans and providers to "improve the care and health outcomes of individuals enrolled in health plans through performance feedback, quality improvement programs, technical assistance, and highlighting of best practices," according to the Commissioner.

Building off the NCQA data, the new Health Department report (which examines data for 1995) adds to the national figures several measurements of specific importance to New York, such as lead testing of children and HIV counseling of adolescents. It includes more than 100 pages of detailed information on managed-care plan's compensation of providers, board certification of participating physicians, access to care and other factors.

"We are pleased to report several areas of overall improvement in lead screening for children, immunization rates for two-year-olds, and adult preventive services," Commissioner DeBuono wrote in a letter opening the report. "In addition, both the quality and the reliability of information submitted by health plans has shown steady improvement."

Virtually across the board, managed-care plans in New York have higher concentrations of board-certified doctors than the overall medical population, the Health Department report shows. In other words, if a family or individual wants to be treated by a physician recognized by others as highly qualified, the typical managed-care plan is a good choice. For instance, the Health Department report shows that well over 90 percent of physicians participating in Oxford Health Plans are board-certified. The statewide average is 89 percent of participating physicians, while the lowest proportion for any HMO is 68 percent.

Six commercial managed-care plans had rates "significantly better than the statewide average" for crucial preventive health measures (immunization, cervical cancer screening and mammography screening). Those were Blue Choice (Rochester), Capital District Physicians Health Plan, Health Care Plan (serving eight counties in Western New York), Health Services Medical Corp. (parts of Central New York and the Southern Tier), Mohawk Valley Physicians Health Plan and Preferred Care (Rochester).

From 1994 to 1995, the percentage of children screened for lead exposure rose from 64 to 68 percent in New York's Medicaid program, and 78 to 86 percent in commercial health plans, the report shows. And immunization rates for children in commercial plans also improved noticeably. Those important steps forward show the types of real benefits from managed care.

"Many plans demonstrated significant improvement from 1994 to 1995, often surpassing statewide averages and national benchmarks," the Health Department report said. "Improvements can be attributed to a variety of interventions including patient and provider education, improved data collection and analysis, and collaboration with community-based providers to name a few."

It's not cost vs. quality

Perhaps the most frustrating—yet most promising—realization about the high cost of health care is this: Higher cost does not necessarily mean higher quality. In fact, the real progress in improving health today has little to do with spending more. Often, it's the opposite—there are changes we could make that would reduce costs and lead to better care.

"The evidence is clear. Improvements in quality of care often go hand-in-hand with reductions in health-care costs," the Agency for Health Care Policy and Research, an arm of the U.S. Public Health Service, said in a 1995 report. "Large private purchasers, managed-care organizations, and health-care providers have already discovered this. They are applying clinical practice guidelines, quality measurement, and outcomes assessment to improve the quality and efficiency of health-care services."

One example of costs that do not contribute to better care: the issue of whether we will pay doctors to become specialists, or to enter general practice as internists and family physicians. Devoting a large part of our health-care dollars to educating specialists, and then paying their salaries, not only means we have fewer dollars available for preventive and primary care—it also means we will pay those high-priced specialists to do some of the services that instead could be done by lower-cost generalists.

"Specialists charge more—and are paid more—for the identical services provided by generalists," the Journal of the American Medical Association said in a 1992 study. In those situations, the journal said, "We should not be surprised if additional resources are not correlated with better outcomes."

The JAMA article pointed out that managed care doesn't just spend less money, it spends money better than traditional systems.

"HMOs and multispecialty groups are more economically efficient in their provision of care," the journal said. "Given the inexorable fact that our nation must limit its expenditures on medical care, it is time to increase the proportion of physicians entering generalist disciplines."

Consumers: more power, and responsibility

The twin drives behind managed care today—for higher quality, and more information—are powerful forces that consumers can use to their benefit.

Major employers such as IBM, Xerox and others are already doing so. IBM, for instance, gives potential health-insurance providers a 900-point questionnaire to solicit detailed information on quality (including clinical and credentialing data), administrative effectiveness (member services, access to providers, and so on), and organizational stability (provider compensation, NCQA accreditation, etc.). Then the company compares employee satisfaction surveys—and, finally, premium rates. The company's more than 500,000 employees have a choice of high-quality, cost-effective health-care options; more than half have chosen managed-care plans.

Not every employer can select health-care plans with the rigor of an IBM; nor can individuals who seek their own coverage do so. Fortunately, information is easily available for anyone willing to do a bit of looking.

Any good library now has a small collection of books with titles such as The HMO Health Care Companion: A Consumer's Guide to Managed Care Networks(8) and How To Find The Best Doctors, Hospitals and HMOs For You and Your Family.(9) Magazines are full of articles that give tips on choosing a health plan the same way we're advised on finding good colleges and mutual funds. Daily newspapers are doing the same, and Internet advice abounds. (The U.S. government's www.healthfinder.gov is one good place to start.)

"Consumers have many options, and a daunting new task: becoming their own health advocates," New York's Daily News said in a recent special report on choosing a managed-care organization. "Although 14,000 Americans sign on with an HMO every day, a recent study found that only 13% believe they know enough to get the most out of their plans."(10)

Consumers have a wide variety of sources of advice on choosing a health-care plan, and more will arise as the marketing of health care grows. For instance, the federal agency that governs Medicare and Medicaid offers assistance through toll-free numbers in every state; in New York, the number is 800-333-4114.

Consumers also need information about providers to make choices within a health plan, and to help decide which health plans best meet their needs. Massachusetts and Rhode Island have implemented toll-free hotlines for residents to learn more about physicians, and Connecticut is considering a similar program.

Just as more information means more power for consumers, the greater choice now available places more responsibility on families and individuals to study their health-care options with at least as much attention as they would for, say, buying a new car or finding the best deal on a mortgage. That will increase the marketplace pressure on health-care plans to continue efforts to improve quality. And, as long as government does not impose new regulatory schemes, it will leave managed-care organizations free to continue finding new ways to serve customers—those who want lower cost and don't mind having a select group of care providers from which to choose, as well as those who want the widest choices possible and are willing to pay for them.

1. Testimony to the House Ways and Means Committee Subcommittee on Health, Feb. 26, 1998.

2. "Insurance-Related Differences In The Risk Of Ruptured Appendix," The New England Journal of Medicine, August 18, 1994; p. 444.

3. Demanding Medical Excellence: Doctors and Accountability in the Information Age, University of Chicago Press, 1997; p.4.

4. "Health Care: The Quest For Quality," Business Week, April 8, 1996; p. 104.

5. "The Quality of Neurological Care, 1997," editorial, Archives of Neurology, November 1997.

6. October 13, 1997.

7. 1995 Quality Assurance Reporting Requirements: A Report on Managed Care Performance, December 1997. Information on the report is available from the Health Department's Office of Managed Care, (518) 486-6865, or at www.health.state.ny.us.

8. By Alan G. Raymond, published by HarperPerennial, 1994.

9. Castle Connolly Medical Ltd., 1995.

10. "Choosing an HMO," Daily News, November 11, 1997; p. 33.

contents introduction section 1 section 2 section 3 section 4 appendix

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