David Marcus
Consultant, Social Policy Group
20 June 2000
Contents
Major Issues
Introduction
Origins and growth of managed care
Emergence of managed care in the
US
Key actions of managed care
Figure 1: Managed Care Tools
Figure 2: The Managed Care Continuum
US Managed Care-an assessment
Cost and quality
Impact on clinical autonomy
Impact on patient autonomy
Service innovations and disease management
Developing a population health perspective
Future of US Managed Care
New Zealand-style managed care-Integrated Care
Is managed care needed in Australia?
The state of health care in Australia
Cost shifting
Fragmentation
Unplanned care and variations in access
Uncertain quality
Rising costs
Managed care trends in Australia
Coordinated Care
Influencing GP prescribing behaviour
National provider agreements-Pathology and MBS
Demand management
Private Health Insurance Pilot programs
Evidence based care, outcomes management and coordination
How might managed care work in Australia?
Objectives for health, and health
reform
Integrated Care Australian-style
Issues and Players
Preconditions for change
Better information systems
Risk-adjustment
Provider support
Consumer-friendly models
A more active private health insurance industry
Conclusions
Endnotes
Glossary
COAG
|
Council of Australian Governments
|
DRG
|
Diagnosis Related Groups
|
GP
|
General Practitioner
|
HIC
|
Health Insurance Commission
|
HMO
|
Health Maintenance Organisation
|
IPA
|
Independent Practice Organisation
|
LOS
|
Length of Stay (in hospital)
|
MBS
|
Medical Benefits Scheme
|
MCO
|
Managed Care Organisation
|
NHS
|
National Health Service (UK)
|
NPS
|
National Provider Service
|
PBS
|
Pharmaceutical Benefits Scheme
|
Major Issues
Emerging in the US in the 1980s, the concepts of
managed health care are increasingly seen around the world as
useful approaches to improving the efficiency and effectiveness of
health care. It is extremely difficult to define managed care,
except very broadly as an attempt to influence the cost, mode of
delivery or quality of health care.
Managed health care is controversial. In the US,
it has been blamed for restricting patient choice, limiting
professional medical autonomy in order to reduce costs and reducing
the quality of health care. Some of these claims are true, but
conversely managed care has also led to many useful innovations and
improvements. Some of these innovations include organising care
around disease groups ('disease management'), better use of
clinical and cost information for managing care, and standardising
care to reduce the variability in cost, quality and access to
services. US-style managed care in fact comes in many varieties.
Moreover, the managed care industry is rapidly changing in response
to intense competition, greater government regulation and consumer
concerns at over-zealous gate-keeping by some companies. Managed
care is not a monolithic approach, but in fact consists of a range
of relatively distinct tools that can be applied in various ways,
without the heavy-handed emphasis on cost control used in the
US.
US-style managed care also reflects the
for-profit motives of many managed care organisations and that
private employers are the main source of funds. For example by the
late 1980s General Motors was spending around US$1200 per car on
health benefits to its employees, at a total cost of $4.8 billion.
The US Government is, however, now contracting with managed care
organisations for the provision of its major public health programs
so it too can take advantage of reduced costs. The cost-control
focus of US managed care has made an impact-the annual rate of
growth in health plan costs to employers declined from 10.9 per
cent in 1992 to 4.8 per cent in 1994, and plan costs actually fell
in 1996.
The challenge for US managed care has been to
achieve cost control without compromising quality. To date, the
jury is still out, though one major review found that quality in
managed care organisations was not clearly worse than in other
forms of care-nor was it noticeably better.
Managed care has aroused much opposition in
Australia, but while clearly many doctors in the US would prefer
not to have managed care staff conducting reviews of their
practices or of their clinical decisions such reviews now seem an
accepted part of contemporary medical practice.
Despite recent moves in the direction of
evidence based medicine much health policy is driven by advocacy,
anecdote and funding availability rather than evidence. The
Australian health system currently suffers several painful
symptoms-cost-shifting and poor coordination between various levels
of government, cost pressures (though overall costs are relatively
stable as a share of GDP) and large variations in access to a full
range of quality services. This variation in access, typified by
sharply varying rates of procedures between regions and population
groups, is possibly the main justification for introducing managed
care to Australia.
There are already several quasi-managed care
initiatives in Australia. These include the Coordinated Care
Trials, pilots in private health insurance arrangements, national
attempts by the Commonwealth to influence prescribing and treatment
patterns, and a host of State/Territory smaller-scale projects
aimed at standardising and integrating care in hospitals and other
contexts.
The major remaining steps for managed care to
fully emerge in Australia are integrating the current myriad
funding and information arrangements. Some governments are
examining concepts of 'integrated care' which combine the pooled
funding approaches pioneered in the Coordinated Care Trials with
managed care tools of utilisation review, standardised care
protocols and advanced information management. Similarly, without
much better information on who is using what services it is
impossible to know why hospital admissions are high, or why GP or
pharmaceutical use is rising or falling.
The purpose of this paper is not confuse these
activities with full-blown managed care. Rather, it is to make the
point that attempts to 'manage care' are scattered along a
continuum from informal peer discussion within an existing
institution, such as a hospital, and professional education on, for
example, evidence based medical procedures through to formalised
protocols and radical funding changes. The aim is to show that the
debate on managed care be focused on where in the continuum of
managed care Australia might aim and under which circumstances.
Within a few years it is likely that Australia
will see identifiable managed care services up and running, if only
as pilots. Governments will be seeking to get better value for
money for the health budgets by eliminating as much as possible any
variations in access and practice.
Despite being vociferous in its attacks on
managed care, organisations such as the Australian Medical
Association (AMA) are not likely to be able to stem the trend
toward this approach. As the US system changes, and as softer
versions of the key managed care concepts become embedded in the
Australian system, the reliance on campaigns against 'US-style'
managed care will become less effective. More substantive obstacles
will be the lack of an integrated health information
infrastructure, an only slightly interested private health
insurance industry and the lack of some of the financial tools
needed to equitably allocate health dollars. Most significant of
all will be both major parties' reluctance to be seen as
endangering Medicare by allowing or stimulating the spread of
managed care.
Introduction
The challenges facing governments to ensure that
quality, efficient and equitable health care is available to their
populations are long-standing and global. Whether in the 'advanced'
OECD economies, the emerging former Socialist economies or in the
developing economies of Asia and Africa health policy reform is
increasingly seen through the prism of 'managed care'.
Australia is no different. Compared with many
nations, Australia's health system is efficient, equitable and
effective. Nevertheless, there will never be sufficient resources
to fund every need (as the recent debate over the subsidy of Viagra
on the Pharmaceutical Benefits Scheme or access to Magnetic
Resonance Imaging shows). Thus, despite Australia's relatively well
run system there are constant pressures to ensure that dollars are
wisely spent and directed to the greatest area of community
benefit. Most governments have already introduced
purchaser-provider arrangements to clarify the often complex
relationships in health care.(1) One new set of tools
increasingly looked to as a way of improving the efficiency and
effectiveness of the health system is managed care.
The aim of this paper is to explain the origins
of managed care in the US health system, separate some of the myths
from the realities of what managed care is (and might be) and
suggest how careful use of some managed care approaches may benefit
the Australian health system.
Origins and growth of managed
care
Emergence of
managed care in the US
Managed care has been defined as any action that
attempts to control the price, location or use of health
care.(2) The aim of managed care is to '...eliminate the
anarchy of the medical workplace'.(3) In understanding
managed care, we need to consider its origins in the US health care
system of the 1980s.
Unlike Australia, Canada and the United Kingdom,
the United States does not have a universal publicly financed
health scheme. While it does have two publicly funded schemes for
the elderly and some of the poor, the working population are either
covered by private health insurance or are uninsured.
The managed care industry was born in the United
States during the 1980s. For many years, US health expenditure had
been high (50 per cent higher than the OECD median even in 1960)
and growing. The main funders (the private employers who
contributed to their employees' health funds) faced health costs
that threatened their international competitiveness. By the late
1990s, for example, General Motors was spending around US$1200 per
car on health benefits to its employees, at a total cost of $4.8
billion-more than the entire South African health
budget.(4) The existing health insurance funds that were
carrying the risk for care-known as indemnity funds-were doing
little to control these costs, or manage care, and had high
administrative overheads. Payments to doctors were mainly
fee-for-service and any increases in charges were simply passed on
to employers. Since doctors and hospitals charged the health funds
at similar rates, there was little price competition. Consumers
generally had choice in which doctors or services they used, and
any excessive costs were passed on to the indemnity fund, which in
turn would pass these on to the employer.
New organisations emerged that saw the potential
to make large savings for employers by being more assertive in
managing care and costs. These new organisations, known as managed
care organisations or MCOs, took a variety of forms but were,
unlike the traditional indemnity funds, mainly for-profit
organisations. Spurred by the need to generate profits and provide
returns to shareholders MCOs made several innovations in order to
reduce costs to employers and gain market share. They were,
overall, extremely successful and have come to dominate the health
care industry. Soon the major Federal Government health programs,
Medicare and Medicaid, as well as related State programs, were
putting their clients into managed care arrangements.
The new organisations emerged in different
forms, with the predominant form becoming the 'Health Maintenance
Organisation' or HMO. HMOs had already existed for over 50 years in
the US, but changes to the tax and health systems in the 1980s led
to enormous expansion. HMOs:
-
- accept the risk of funding the health care needs of its members
from the fees paid to it
-
- offer prepaid, comprehensive health coverage for both hospital
and physician services (that is, the consumer or their employer pay
the health plan up front, and the plan must then live within the
budget of what it takes in). Payment is usually capitated, that is,
a standard amount per consumer. This payment, being paid in
advance, creates an incentive for the plan to be economical in how
much care it provides, as it must fund any excess use
-
- enter into contracts with health-care providers (e.g.
physicians, hospitals, and other health professionals). This
contract is usually again on a capitated payment rather than the
traditional fee-for-service, and
-
- require members to use participating providers for all health
services. If they use a provider from outside their plan, the
consumer must usually pay a higher co-payment for that
service.
These organisations thus use similar approaches
to Australian health insurance funds. The major local differences
are that there is less exclusive contracting with providers,
members in health funds may still see any provider they wish
(though increasingly there are incentives to go to contracted
providers) and, most importantly, local funds are much less
interested in seeking to influence provider behaviour.
HMOs come in a variety of forms. These include
staff (where doctors are directly employed by the HMO), group
practice (where the HMO contracts with a separate group of
providers), network (using multiple groups and
single-practitioners) and independent practice association or IPA
(where a formal doctor organisation acts as an intermediary between
the HMO and individual doctors).(5)
Key actions
of managed care
[in the US] ... managed care has come to denote
a confusing variety of structures and strategies to improve the
performance of the health care system; these range from
reimbursement incentives to alternative delivery systems to
detailed protocols guiding physician behaviour.(6)
Managed care organisations use a complex mix of
tools and techniques to achieve their aim of controlling costs and
quality. It has been the application of these tools that makes
managed care what it is, and accounts for some (but not all) of the
controversy surrounding it. Figure 1 lists some of the major tools
and processes used in managed care. These processes can be drawn
together into the following elements common to most managed care
organisations:
-
- contracts with selected physicians and hospitals for a
comprehensive set of health care services to be provided to a
defined population;
- utilisation and quality controls negotiated with providers;
- the extensive use of guidelines and protocols to regulate the
provision of care by providers;
- the use of information technology to monitor services, quality
and outcomes;
- financial incentives for patients to use the plan's providers
and services (there may be greater co-payments for use of a
provider who is not on the plan's list);
- the assumption of some financial risk by physicians, 'thus
fundamentally altering their role from serving as agent for the
patient's welfare to balancing the patient's needs against the need
for cost control'.(7)
Figure 1: Managed Care
Tools
Capitation
Allocating resources to purchasers or providers
on a per-capita basis-which is then usually capped with a global
total. Capitation can be on a regional or other basis (such as a
particular disease group). The aim is to encourage those funded to
be more economical in the use of services and to find the most
effective combination of services to achieve the most health
benefit within the amount available.
Risk adjustment/Risk-adjusted
capitation
Simple capitation of a flat amount per person
will often be inequitable, as different people and populations have
different needs and costs. The aim of risk-adjustment is to
recognise these differences in need by varying the amount capitated
depending on the person or group's age, sex, disease status or past
use of health services. This helps reduce the incentive for
providers to unduly limit services to those in need. Capitation is
said to encourage under-provision of services, as any 'excess'
provision is not paid for. On the other hand it encourages
investment in preventive care, since providers have an incentive to
avoid, for example, hospitalisations that might have been prevented
by better (and cheaper) community care or support.
Utilisation
review/Pre-authorisation
-
- Staff in the MCO review and control a patient's use of medical
services and the appropriateness and quality of that care. Involves
data collection, review, and/or authorisation, especially for
services such as specialist referrals, emergency room use and
hospitalisation.
- A cost-control method used by some insurers and employers to
identify and reduce inappropriate and unnecessary care.
Claims review
The method by which a consumer's health-care
service claims are reviewed by a third party (usually an agent
employed by a managed care plan) prior to reimbursement to validate
the medical necessity of the service and that costs are not
excessive. This usually involves the Managed Care Organisation
(MCO) reviewing claims made by a medical provider for services
already delivered, and thus puts the provider at some risk. It is
primarily a cost-control measure.
Concurrent/Pre-admission
review
The Managed Care Organisation will require the
review of a proposed procedure or hospital admission done by a
health care professional (usually a nurse) before or while the
service is being performed-usually done by telephone, fax or at the
site.
Risk-sharing
Risk can be shared between the MCO and
providers, for example if hospitalisation rates exceed agreed
thresholds then doctors will bear some of these excess costs.
Formulary
A list of selected Pharmaceuticals and their
appropriate dosages felt to be the most useful and cost-effective
for patient care. In HMOs doctors are often required to prescribe
from the formulary. Similar to the role played by the
Pharmaceutical Benefits Scheme in Australia.
Medically necessary
Those covered services required to preserve and
maintain the health status of a member or eligible person in
accordance with the area standards of medical practice. The
definition of 'medically necessary' is controversial, and a
frequent source of debate between providers and the MCO.
Outcomes management
The use of studies to measure and evaluate
health status and quality of life and document changes in these as
a result of therapeutic interventions. Outcomes management differs
from clinical trials in that data are collected as part of routine
medical care, and it attempts to determine what is appropriate
resource consumption. Requires excellent patient information
linking service use and outcomes to diagnosis and demographic
information.
Closed panel
Access to providers is limited to those
participating (either directly, or under contract) to a particular
plan. Referrals to specialists may also be limited to a designated
list, unless the patient chooses to pay for the visit. Different
types of managed care impose these limits to varying degrees.
Disease management
The disease management model is based on the
premise that the health of individuals with chronic diseases (or
other acute conditions likely to lead to regular hospital
admission) can be successfully managed and the cost of the required
health care resources can be reduced if all individuals with a
particular chronic disease are viewed as a separate population.
This approach has been largely driven by the pharmaceutical
companies, which are striving to ensure that the pharmaceuticals
they develop to assist physicians manage and improve a patient's
condition are clearly associated with the disease management
process adopted by a physician. As a result, information on this
form of reimbursement is disproportionately available for disease
categories that require substantial amounts of pharmaceuticals.
|
Source: This table was drawn from several
sources, including P. R. Kongstvedt, The Managed Health Care
Handbook, Second edition, Aspen Publishers, 1993.
Figure 2 shows how these tools are used in the
various forms of managed care. Whatever the differences between
different types of managed care, the major difference is with the
traditional indemnity plan. These plans generally allowed the
consumer freedom of choice in providers, had no utilisation review
of physician decisions and paid physicians by fee-for-service
rather than capitation. Managed care does, however, generally offer
more preventive care and lower co-payments.
Figure 2: The Managed Care
Continuum

Source: D.K.P. Freeborn and R. Clyde,
Promise and Performance in Managed Care: The Prepaid Group
Practice Model, Johns Hopkins University Press, 1994.
US Managed
Care-an assessment
With differences between managed care
approaches, and changes within the managed care industry, it is
difficult to form overall conclusions about the impact of managed
care. However, at the risk of simplification, some assessments can
be made.
Cost and
quality
In terms of costs, managed care has clearly
achieved control (at least for the time being) in both costs to
employers and the economy.(8) The annual rate of growth
in health plan costs to employers declined from 10.9 per cent in
1992 to 4.8 per cent in 1994, and plan costs actually fell in 1996.
There is some evidence that consumers' out of pocket costs have
started to rise, as plans impose more co-payments on
members.(9) The success in cutting costs is not
surprising, given the focus of managed care. The major question is
whether this has been at the cost of quality.
One recent review of the impact of managed care
on quality found mixed results.(10) Although most
quality-of-care results were favourable to HMOs or showed similar
quality of care (compared to traditional fee-for service plans),
some comparisons were unfavourable. As an unbiased observer would
expect, there was a range of results, depending on the orientation
of the individual organisation. The authors concluded, however,
that the mixed results disproved the thesis that HMOs were
only interested in cost cutting. If this was their sole
focus, a more consistently negative pattern would have been
expected.
One issue of controversy for managed care is the
impact on length of stay in hospital, with complaints of
'drive-through mastectomies' and pressure on doctors to discharge
as soon as possible. Apart from evidence that shortened length of
stays can actually improve outcomes if complemented by
supportive care after discharge, early discharge has also been an
issue in many countries without managed care-including Australia.
Shortened stays in hospital after childbirth has been blamed on
managed care in the US where length of stay (LOS) averages 1.5
days. Interestingly Australia, Turkey and New Zealand are the only
other countries with an average LOS of 3 days or less after a
normal delivery.(11) Since 1960 reductions in average
length-of-stay in the US have been comparable to or slower than in
most other OECD countries. The point of these comparisons is to
show that not all alleged defects attributed to managed care are
unique to that form of care.
A major area of concern with US managed care is
the treatment of expensive patients such as those with chronic
illnesses. There is no doubt that some plans have biased their
selection of patients toward less-expensive
patients.(12) There is less evidence that MCOs have
'stinted' on the care given to such patients. Over time the
industry has responded to the needs of the chronically ill, and
implemented innovative case-management approaches, or segmented
their patient populations (so-called 'carve outs') to better focus
on their needs. These efforts (and also those in Australia in the
Coordinated Care Trials) have been driven by the disproportionate
share of the health dollar consumed by people with complex, chronic
needs. There have also been moves to improve the incentive to
recruit expensive patients, by paying plans more for such patients,
so they can be confident they will have the resources to meet their
needs.
Impact on clinical
autonomy
Ideally, medicine should be ruled by rationality
and efficiency in the choice and implementation of evaluations and
treatments. This means that the variability between providers not
only should be but can be eliminated, and the only factors that
should make a difference in deciding who to treat and what
treatment to undertake is the nature of the patient's disease or
injury.(13)
... sensible debate over Managed Care has been
impeded by the successful attempt of the medical profession to
discredit it. The attempt is unsurprising as the beneficial effects
of Managed Care-lower costs, coordinated and better care-translate
into lower medical incomes and interference with medical
autonomy.(14)
In its drive to standardise and optimise patient
care, managed care does challenge traditional concepts of clinical
autonomy. Utilisation review (where provider service patterns in
prescribing drugs or ordering procedures are reviewed by a third
party) is a common strategy and one some doctors find
objectionable. One study found that around 40 per cent of all
patients (in managed care plans and conventional plans) were
reviewed for length of stay, site of care or appropriateness of
treatment.(15) The rates for doctors in managed care
plans would have been even higher. This perceived second-guessing,
compounded by high levels of administration and limits on referrals
accounts for much of the hostility to managed care by providers.
Other studies suggest that the level of actual denials of service
is quite small, with one study suggesting only 3 per cent of doctor
recommendations about medical care, 1 per cent of hospital
admissions and no more than 1.2 per cent of surgical procedures are
denied or reversed by HMOs.(16) In other words, the
utilisation review process is resented as time-consuming and an
intrusion, but the actual outcomes (in terms of care delivered) are
only occasionally affected. Compounding physician dislike of
utilisation reviews' impact on their autonomy is the fact that
reviewers were often not doctors, but were nurses or had no medical
qualifications at all.
Utilisation review can be done in far less
intrusive ways. In the British National Health Service, for
example, concepts of peer review within a group GP practice are
increasingly accepted. In the 'pure' HMO model peer review is often
the main mechanism for utilisation review (see Figure 2).
MCOs also make use of protocols and guidelines,
often requiring doctors to abide by such guidelines as a condition
of contract or employment.
Impact on patient
autonomy
Managed care clearly imposes and partly relies
on restrictions on consumer choice. Particular plans recruit or
contract with doctors and hospitals to take their patients under
conditions of price, quality review and so on. Patients can go
'off-plan' but may have to pay for this privilege. As discussed
above, consumers are seeking plans that give greater choice and
MCOs are responding by offering this either within the plan or with
additional co-payments. Should managed care emerge in Australia,
persuading consumers to limit their choice could be a great
barrier. On the other hand, Australian consumers are largely
'guided' through the system as it stands, taking their GP's advice
on suitable specialists or hospitals.
Service innovations and disease
management
One of the greatest impacts of managed care has
been to stimulate change in the way health care is delivered. Some
organisations have established call centres to offer advice to
members and case management programs where high-risk patients get
extra assistance and guidance in using services and managing their
condition. Others have tested also self-care programs where
patients are given intensive education and resources to manage
better their own care or have established intricate health
information systems in order to improve effectiveness and lower
costs. Some of the best models have taken a particular disease as
their focus. The 'disease management' approach is based on the
premise that the health of individuals with chronic diseases can be
successfully managed and the cost of the required health care
resources can be reduced if all individuals with a particular
disease or condition are viewed as a separate population. For
example:
-
- In one study of cardiovascular disease, the use of direct
feedback to practitioners of outcome data on their patients,
application of continuous quality improvements and site visits to
participating providers led to a 24 per cent reduction in mortality
associated with coronary artery bypass graft
surgery.(17)
-
- In another study of the use of disease management for diabetes
in a US scheme found first year outcomes of:
-
- 12.3 per cent reduction in costs
-
- 74 per cent rise in eye examinations and an even greater rise
in foot examinations
-
- an 18 per cent fall in hospital admissions
-
- a 22 per cent fall in bed days.
-
- A program using a call centre to target high-risk pregnancies
is reported as achieving an 18 per cent fall in neonatal intensive
care unit days, cost savings of $500 000 and reduced the incidence
of very-low birthweight babies by 12.5 per cent.(18) One
of the most cost-effective approaches is to empower patients to
self-manage their illness or condition.
Self-management is the key to Olsten Health
Services' asthma program, which has served more than 1,200 adults
and children in the last four years. Based on the National
Institutes of Health Guidelines for the Diagnosis and Management of
Asthma, Olsten's Adult and Pediatric Self-Management Program is
conducted in the patient's home. Specially trained nurses spend
time in the patient's home to determine what may trigger asthma
attacks-wall-to-wall carpeting, smoke, allergens and pets-and then
tailors a program to the needs of each patient.
Nurses spend about three, two-hour sessions with
each participant and review their medications, teach them how to
use the peak flow meter for monitoring lung capacity, instruct them
on what to do in an emergency, illustrate relaxation exercises,
create problem-solving scenarios, give tips on how to predict an
oncoming episode and help patients learn how to communicate better
with their providers.
A recent study indicated that adults who
participated in the Self-Management Asthma Program each saved
payers an average of $10,000 annually. Hospitalization for children
within three months prior to enrollment was 36% and dropped to 9%
within three months of the program's conclusion. In addition, 5% of
children, compared with 14% before enrollment, considered
themselves severe asthmatics.
|
Source: M. Edlin, 'New DM approaches help keep
costs entrapped', Managed Healthcare, vol. 9, no. 12,
1999; pp. 940-45.
Such interventions are possible under a
traditional system. However they are more likely to occur if
funding is integrated, and one funder bears responsibility for, as
an example, all health outcomes in a region, rather than just
hospital or primary health care costs. When funding is not
integrated no one funder has an incentive to make improvements that
might benefit another funder.
Developing a population health
perspective
Paradoxically (given the private nature of US
health care) one of the strengths of managed care has been its
ability to respond to the determinants of health outside the health
system. MCOs are not bound to spend only on direct health services
such as the disease management approaches above. Some MCOs,
especially those working in mental health and substance abuse
sectors, have developed innovative programs to tackle stress,
family support and other factors affecting health. Other examples
include MCOs tackling community injury hazards in order to reduce
expensive neck injuries-a self-interested motivation, but one which
also works in the community's interest.(19)
Future of US
Managed Care
Despite rapid gains in market share in recent
years the future of managed care is not guaranteed. According to
one commentator '...within 10 years little will remain of orthodox
managed care'. Some major HMOs face insolvency. Returns to
shareholders are falling, as are satisfaction rates by enrollees.
The major cause of this decline is consumer dislike of the
restrictions of capitation-based managed care, in particular
because of the limited choice in providers
available.(20) The public image of HMOs and managed care
is poor. Extreme examples of over-zealous gate-keeping, early
discharge and denial of benefits have led State governments to
correct what was probably under-regulation by enacting a range of
'patient rights' or Managed Care Bills. Over 1 000 bills affecting
managed care were introduced into US State legislatures in 1996 and
over 100 signed into law. These have mandated minimum
length-of-stay and enshrined provider rights to criticise or
disagree with plans. There are also indications that costs could
again be rising as HMOs struggle to contain pharmaceutical and
technology costs. In response some corporate purchasers are banding
together to buy care directly from provider networks, bypassing
MCOs.(21)
HMOs are responding to these challenges in two
ways. First by limiting the use of capitation as a way to fund
providers and moving to a mixed system of capitation and discounted
fee-for-service. This allows doctors and patients more flexibility,
for example by rewarding doctors for extra service (while
capitation tends to reward under-servicing and preventive care).
The second strategy is to allow greater access to non-HMO
providers, giving patients more choice.
The next wave of change is unlikely to be a
return to the pre-managed care era. On the contrary, competition in
the market place will encourage further dissemination of managed
care concepts across different styles of health plans, as plans try
to find the balance between cost and quality control, and consumer
acceptance, as one recent commentator put it:
Indemnity carriers, Blue Cross plans, and
[fee-for-service] Medicare relied heavily on deductibles [excess
payments], coinsurance, exclusions of preventive services, annual
limits on hospital days, and maximum lifetime payment. HMOs offered
comprehensive benefits without deductibles, coinsurance, and
maximums but with modest co-payments at the time of service. Recent
years have witnessed partial convergence, as indemnity plans cover
more preventive services and HMOs experiment with higher
co-payments for emergency room and hospital use. The dominant
trend, however, has been toward the proliferation of benefit
designs to accommodate the differences among consumers in
preferences and ability to pay.(22)
Distinct managed care organisations may fade
away, but managed care techniques and concepts are almost certain
to continue. Managed care concepts have already spread to many
countries, with one example near to Australia being New
Zealand.
New
Zealand-style managed care-Integrated Care
Managed care models mirror their environments.
The American models were created in an environment dominated by the
drive of employers to contain the costs of health care ... The New
Zealand approach is different. We access our health care and
disability support services through a system operated largely by
monopoly purchasers securing the supply of services, and monopoly
providers providing these services. We have a different system with
different issues, different incentives.(23)
New Zealand recently introduced a series of
reforms based on the concept of 'integrated care'. A new national
Health Funding Authority (HFA) is responsible for purchasing
services from the full range of providers from GPs to hospitals,
midwives and pharmaceutical companies. The HFA's goal is to
purchase services in a way that achieves the maximum gain for the
people of New Zealand within the available
budget.(24)
New Zealand's Integrated Care
Initiative consists of 18 projects testing out a range of
approaches to provide seamless care to consumers. The initiative is
seen to be more likely to succeed than previous attempts by
providers as the HFA can use financial incentives and purchasing
agreements to achieve flexibility and coordination among providers.
The definition of integrated care can include projects ranging from
the promotion of clinical guidelines to the total transfer of a
capitated budget for all services in a region. The initiative is
testing a range of hypotheses that include:
-
- 'Integrating service delivery is dependent on integrating
funding streams', and
-
- 'Budget responsibility for a wide range of primary care
services improves health outcomes and is cost
effective.'(25)
The New Zealand approach to Integrated Care is
very similar to that used in the Australian Coordinated Care
Trials, with the major difference being that integrated care allows
the possibility of purchasing for the full population, rather than
the chronically ill sub-groups in coordinated care. The initiative
uses the concept of 'delegated purchasing' to give an agent with
the most information about health needs and services the ability to
make decisions. The concept of integrated care has emerged as one
way to meet these goals. Integrated care is described as having
three tenets of:
-
- continuity of care
-
- appropriateness of care and interventions, and
-
- value for money.(26)
Is managed care needed in Australia?
The state of
health care in Australia
The Australian system is generally acknowledged
to be high quality and relatively efficient. Compared to the US
system it is vastly cheaper with as good if not better health
outcomes. Nevertheless, managed health care techniques are under
active consideration in Australia as a possible solution to some
long-standing problems. Should managed care be more widely used in
Australia, it will reflect the local environment (such as the far
greater role of government and emphasis on equity) and be a very
different creature to that in the US.
Despite the diversity of views on what exactly
ails the Australian health system, the major concerns usually
include:
-
- cost-shifting
-
- fragmentation
-
- unplanned care
-
- variable quality
-
- rising costs.
Cost shifting
Cost shifting occurs whenever two or more
funders are potentially liable to fund a service. Each will try to
pass the cost to another funder. Typical cost-shifting tactics
include closing public outpatient departments and referring
patients to Medicare funded GPs, or limiting the amount and size of
prescriptions to patients on discharge and asking patients to get a
new script from their GP. This passes the cost to the
Commonwealth-funded Medical Benefits Schedule (MBS) and
Pharmaceutical Benefits Scheme (PBS).
Cost shifting has several negative impacts:
-
- patients lose access to free services from public hospitals and
may have to pay co-payments for GP or specialist services and
pharmaceuticals
-
- patients face travel costs to see providers in different
geographic locations or in different clinical contexts
-
- training opportunities for clinical staff diminish
-
- patients may be in hospital inappropriately, for example if
rationed nursing home beds are not available
-
- longer waiting times for emergency treatment for urgent and
non-urgent care due to lack of after-hours or bulk billing GP
services
-
- the flow of information about a particular patient is disrupted
as clinical records become fragmented, making adverse events more
likely.(27)
Fragmentation
Fragmentation of the system, between public and
private, hospital and GP, health and community services has several
consequences. While cost shifting diverts energy in an active quest
for savings at other funders' expense, fragmentation of management
and funding discourages innovation where other funders might reap
the benefits. Hospitals have no incentive to engage in patient
education that might save GP visits, and GPs have little incentive
to work cooperatively with other providers if demand for their
services (and income) is affected. That innovation does occur at
all is a tribute to the values and commitment of individual
providers.
Fragmentation adds to costs by making the system
harder to navigate for consumers and providers. It makes sensible
substitution between higher and lower modes of care difficult, if
not impossible. It makes it far harder to assemble packages of care
to respond to complex medical or other needs. Various solutions
have been proposed, most notably under the Council of Australian
Governments (COAG) proposals of the late 1990s when it was
suggested that a new, national system be constructed rolling the
multiplicity of separate programs into a single health and
community care program.(28) Indirectly, fragmentation
affects quality of care as possible poor quality care (especially
from the consumer's perspective) can often be attributed to
breakdown in continuity. Such breakdowns are especially significant
between hospitals and primary health care, between primary health
and community health sectors and across Commonwealth and State
program boundaries.
Unplanned care and variations in
access
Who determines who will get access to what
treatment when? At present the answers to these questions are ...
inefficient, confused and undemocratic. Hopefully in the next
decade [effort] will create greater efficiency and openness in
resource allocation systems in health care.(29)
Most in the community would expect that, with a
publicly funded national system such as Medicare, services will be
available and used generally according to need. Thus the rate of
appendectomies or heart surgery should (after adjustment for the
age and sex of the population) show little variation across
Australia. In fact, recent studies found a wide variation in the
distribution of 15 well defined hospital procedures across
Victoria. For some procedures the variance across regions was 45
times what would be expected, given the age and sex distribution
(i.e. the 'need') in these areas. Contrary to an expectation that
resources available should reflect need, the authors found that
'for some procedures resources are almost randomly allocated across
the state'.(30)
Studies of surgical procedures routinely find
significant disparities between geographic areas. In one study of
breast surgery, the share of women undergoing breast conserving
surgery varied from 34 per cent in Western Australia to 49 per cent
in South Australia and the Northern Territory. The authors were
unable to explain the variation, though it is most likely due to
the attitudes of individual surgeons. The same study noted that the
rate of breast-conserving surgery in rural areas was sharply lower
than in urban areas, suggesting that while some variation is
random, other variation is more structural.(31)
The recent report of the NSW Health Council
found that women living in one Area Health Service are twice as
likely to undergo a hysterectomy than women of similar age in
another area. Similarly, the report found there were twice as many
tonsillectomies performed on patients in one part of NSW versus
similar types of patients in other parts of NSW.(32)
Uncertain
quality
The Commonwealth's recent establishment of a new
Australian Council for Safety and Quality in Health Care
demonstrated its intention to tackle undesirable rates of medical
misadventure and variations in quality. Evidence on the quality of
the health care system is difficult to come by. Some studies have
been conducted which suggest problems, especially in prescribing,
but more detailed information will depend on the impact of the
Council. There were also concerns about the quality of prescribing
which led to the establishment of the National Prescribing
Service.
The 1995 Quality in Australian Health Study
suggested a higher-than expected number of hospital admissions were
associated with adverse events, however there is little objective
evidence on the overall quality of the health care
system.(33)
Rising costs
The threat of rising health care costs is
usually portrayed as in the future rather than the present.
Australia's record on health care costs is generally good-at around
8.5 per cent of GDP Australia is around the middle of the OECD
ladder. In 1996, the United Kingdom and New Zealand spent
proportionately less on health than Australia, at 6.9 per cent of
GDP and 7.2 per cent of GDP respectively, while Canada (9.2 per
cent of GDP), France (9.6 per cent of GDP) and the United States
(14.2 per cent of GDP) spent more.(34) The ageing of the
population is said to pose a future threat to health costs, however
there is controversy over this, with some commentators noting that
European countries manage to cope with 'older' populations than
ours, and that future 80-year-olds will be much healthier than
current people of that age. There is more consensus that the rising
cost of acute care and pharmaceutical technologies pose more of a
challenge, and that tighter controls will be needed to limit their
impact. Recent controversies over access to expensive
pharmaceuticals (Viagra) or diagnostic procedures (Magnetic
Resonance Imaging (MRI)) show that competition for funding is
intense.
Managed care trends in
Australia
Traditional fee-for-service arrangements provide
few mechanisms for funders of health care services to specify
health care priorities or to cap the benefits payable annually for
such services. Priority has now been given to developing such
mechanisms, but this process is still in its early
stages.(35)
We saw above that the term 'managed care' covers
a wide variety of policy directions that share a common focus of
influencing the cost, quality or method of care. As such, managed
care is far broader than US-style attempts to control doctor
incomes.
The concepts of managed care are already in
Australia. There is already discussion over what models might work
and which might not. There is also a range of initiatives currently
being tested or implemented that, while not 'full-blown' managed
care, do echo its directions. Some of these initiatives are
discussed below. The purpose is not confuse these activities with
full-blown managed care, but to make the point that attempts to
'manage care' are scattered along a continuum from informal peer
discussion within an existing institution such as a hospital,
professional education of, for example, evidence based medical
procedures through to formalised protocols and radical funding
changes. The aim is to show that the debate on managed care should
not be either/or, but deciding where in the continuum of managed
care Australia might aim and under which circumstances.
Coordinated
Care
The series of Coordinated Care Trials now
running in Australia embody many elements of managed care
approaches.(36) Trials consist of:
-
- a Trial sponsor (such as an area health service or
Division of General Practice) which is contracted to State and
Commonwealth governments to manage the funds allocated to the Trial
for services and set-up costs
-
- a funding 'pool' which combines funds drawn from a
range of Commonwealth and State health care programs such as the
Medicare Benefits Scheme (MBS), Pharmaceutical Benefits Scheme
(PBS) and hospital funding; which can be used to buy any services
for individual patients thought appropriate, and which
supports
-
- a care coordination process which can be undertaken by
a person (say a local GP or designated coordinator), a service
(such as an Aged Care Advisory Team) or even through a computer
system, and which deals with
-
- a defined client group (usually people with high care needs
with a particular diagnosis or condition, or those with a range of
chronic illnesses).
The Trials thus include aspects of managed care
such as:
-
- an independent, third-party purchaser who receives capitated
payments from separate funders which are adjusted for risk or
experience (i.e. are not community rated)
-
- contracts or agreements with providers to deliver services to
the Trial clients
-
- the use of guidelines, protocols or incentives to encourage
particular patterns of care
-
- the use of incentives (including the promise of better care)
for patients to stay within the Trial, and
-
- at least limited use of utilisation review of provider
behaviour and performance.
The Trials were established in response to the
same problems of cost-shifting, perverse incentives and the
particular problems people with multiple or chronic conditions
faced in gaining appropriate care. The Trials were controversial
when established, and accused of being 'US style managed care'.
Nevertheless, they managed to recruit large numbers of GPs. This
was partly as a result of two policy tenets introduced by the
current Government. The first was that the Trials had to be 'GP
centred'. A set of guidelines cementing the role was developed and
enforced. The other was that the concept of clinical autonomy was
specifically addressed, with trials directed that they had to
'maintain the medical practitioner's freedom, within the scope of
accepted clinical practice, to identify appropriate treatments'.
Interestingly, this policy has since been inserted into recent
changes to private health insurance legislation dealing with
purchaser-provider agreements (section 73BDA of the National
Health Act 1953).
The interim evaluation of the Trials has now
been completed. That evaluation found that:
-
- care coordination has not led to any significant change between
intervention and control group clients
-
- cost per client day for trial clients had not been reduced
-
- hospitalisation rates had not been reduced
-
- coordination costs as a share of the total pool ranged from
11-22 per cent, and
-
- some Trials had recruited the wrong clients, tending to be
those who did not need intensive coordinated
care.(37)
These findings were based on preliminary data
and the final evaluation, due later in 2000, is hoped to be able to
give more authoritative findings. At this stage it seems premature
to claim that the Trials are a success or not in terms of improving
health outcomes for their clients. The Trials have, however,
definitely expanded the boundaries of health system reform by
showing that pooling across program and governmental boundaries can
be done.
Influencing
GP prescribing behaviour
The Pharmaceutical Benefits Scheme (PBS)
subsidises approximately $3.0 billion of medication each year. In
Australia it is estimated that over 80 000 people are admitted to
hospital each year for problems related to medicinal drugs-half of
these admissions may be preventable.(38)
Much as managed care organisations limit the
drugs available and attempt to influence prescribing behaviour, the
Commonwealth has put in place a range of measures with the same
aim. The PBS itself places limits on what drugs are subsidised. The
Commonwealth has also established:
-
- The Quality Incentives for Prescribing scheme, which offers to
share benefits of reduced (but still appropriate) prescribing with
GPs. The scheme was announced in the 1999-2000 Budget and is still
being negotiated with GPs.
-
- The National Prescribing Service. The NPS is an independent
public company, operating within the framework of the National
Medicinal Drug Policy. The goal of the NPS is to improve the health
outcomes of the community through quality (judicious, appropriate,
safe and cost-effective) use of medicines. During 1998-99, it ran a
series of communication and information programs, GP visits,
clinical audits and other strategies to encourage better
prescribing by medical practitioners.
National
provider agreements-Pathology and MBS
Over recent budgets, the Commonwealth has
developed agreements with radiologists, pathologists and GPs to
limit growth in outlays. To varying degrees, these agreements have
enabled the Commonwealth to negotiate 'capped' budgets that make
each profession responsible for ensuring the budget is not
exceeded.(39) Some of the achievements in the first
pathology agreement were:
-
- agreed fiscal outcomes (i.e. growth was limited to the target
range)
-
- access to quality services was preserved
-
- an enhanced evidence base for pathology, and
-
- a proven capacity to target interventions in identified
problems.(40)
However, the financial impact of capped budgets
may not solely affect medical practitioners. Experience suggests
that reducing funding from one source can simply deflect pressure
to other sources, such as consumer co-payments. It will be
interesting to see the impact of the pathology agreement on patient
payments and the incidence of bulk-billing by radiologists, as
practitioners attempt to maintain their incomes from sources other
than Medicare rebates.
Demand
management
The West Australian Government recently
established a telephone-based demand management system called
HealthDirect. The service uses a call centre to provide 24-hour
health information and advice and triage of services to the
population of Perth, covering around 1.6 million
people.(41)
Private
Health Insurance Pilot programs
The Commonwealth is facilitating innovation in
the provision of private health insurance services. The projects
include early discharge programs that allow patients to go home
sooner, with additional in-home support paid for by their health
fund. This saves the fund money (as in-home care can be cheaper
than a hospital bed) and enables the patient to return to familiar
surrounds. The projects are to be evaluated to assess if they are
safe, are accepted by clinicians, beneficial to patients, are
cost-effective, and are a true substitution of care rather than an
additional service.(42)
Evidence
based care, outcomes management and coordination
Many of the tools used in managed care are
already being applied as 'quality improvement' projects within
hospital systems. A recent round of funding in Victoria supported
projects to:
-
- improve training on appropriate use of expensive drugs in acute
coronary syndromes
-
- improve consistency of good clinical practice and reduce
variations across a hospital in obstetrics and gynaecology
-
- develop 'managed care plans' for the top 10 high volume
Diagnosis Related Groups (DRGs) and those DRGs identified as
complex(43)
-
- 'improve continuity of care from pre-admission to discharge
thereby reducing length of stay ... and increase consumer and
provider satisfaction', and
-
- improve health outcomes and reduce variations in practice
across emergency departments.(44)
How might managed care work in
Australia?
It is highly desirable that managed care regimes
should be undertaken in accordance with protocols and guidelines
incorporating expert medical opinion, based on the best evidence,
and be under the control of medically qualified people, with the
aim of maximising clinical effectiveness, rather than minimising
costs.(45)
Objectives
for health, and health reform.
One of the major analysts of Australian health
policy, Professor Richard Scotton, suggested in a recent review
that the goals for health policy are:
-
- Efficiency: the optimal allocation of resources
-
- Health: favouring services and delivery modes which have higher
returns in terms of health improvement per unit of resources
used
-
- Equity: no person's access to medically effective health
services should be limited by capacity to pay or result in
financial hardship.(46)
Other commentators have suggested a framework
of: good health, low cost, satisfaction on the part of both
consumers and providers, and equity (medical and
financial).(47) While these categories can be reshuffled
endlessly, there is broad consensus that they are important. There
is less consensus about the strategies needed to achieve these
goals.
Integrated
Care Australian-style
There are signs that 'integrated care' is
emerging in Australia as a concept that tries to adapt the tools of
managed care to the Australian context.
The clearest exposition of integrated care was
contained in a discussion paper released jointly by the ACT
Department of Health and the ACT Division of General Practice in
1999. Interestingly, the ACT Division later distanced itself from
the proposals in the paper.
Proponents of integrated care are vague on its
exact shape, but it would most likely:
-
- exist as a discrete Integrated Care Organisation (ICO) which
includes provider representation in the governing structures
-
- be based on a single-funder-taking funds from Commonwealth and
State health and related programs to avoid problems of
cost-shifting and provide the basis for more flexible funding to
services and consumers. The budget for the ICO would be based on
risk-adjusted capitation
-
- have a regional focus and an identified population-once having
defined a population, the ICO would focus on an agreed set of
health outcomes for that population
-
- have a population-health focus-the emphasis would be to have a
better mix of treatment, prevention and health promotion
-
- emphasise the needs of patients, not providers, while
maintaining choice of GP and Medicare-like services (interestingly,
the current Health Care Agreements require reform proposals to
preserve consumer entitlement to Medicare Benefits Schedule
services 'or their equivalent')
-
- be able to use tools and incentives for quality outcomes that
reflect best clinical practice-utilisation review and continuing
education, presumably negotiated with providers
-
- establish systems that encourage cost-effective care, and
-
- support a choice in the amount of risk borne by the ICO,
governments and providers.(48)
Establishing such a model will require
substantial shifts and changes in the health care system.
The Australian Democrats have recently released
a proposal that centres care around the patient, pooling all health
care funding under the administration of new Regional Health
Authorities.
Issues and Players
Medicare now has bipartisan commitment.
Paradoxically, such commitment may prevent the full investigation
of possible reforms, as both parties strive to avoid doing anything
that may be construed as damaging Medicare. Nevertheless, the logic
of reform makes it increasingly likely that concepts of managed or
integrated care will continue to emerge in Australia.
Moves toward managed care will continue to face
criticism from a range of perspectives-some self-interested, some
more principled. Managed care does carry with it some risks:
-
- it may be more expensive than is justified by the health
benefit or other efficiency improvements due to the greater cost of
information and care management systems
-
- it may put consumer privacy at greater risk (though this could
be protected with enhanced safeguards), and
-
- it will be difficult to strike a balance between standardising
better care and unduly restricting medical judgement and
autonomy.
The potential benefits in addressing some of the
acknowledged problems in the health system could be to:
-
- reduce the focus on cost-shifting by pooling funds. Purchasers
could then make decisions based on their health impact, not on
short term budget savings
-
- reduce fragmentation, by allowing the formation of, for
example, regional health services to develop, implement and fund
programs that coordinate hospital, GP and allied health
services
-
- improve equity and consistency of access to services, through
greater standardisation of treatment pathways
-
- facilitate quality improvements through better information on
the impact and outcomes of different services.
Preconditions for change
Government and private funders are continually
pushing back the boundaries of reform. Managed care-style
approaches are already being tested within the current system(s).
These innovations, however are limited in scope to either
particular providers (e.g. within hospitals) or special
environments (such as Coordinated Care). The momentum is building
for broader change, centred on the integrated care approach of a
regional fundholder contracting with purchasers to manage services
for an entire population. While, to some extent, financing changes
can be separated from managed care, one tends to lead to the other.
The main benefit of delegating purchasing is to delegate financial
risk by putting at least a 'soft' cap on funding-this provides the
purchaser with the incentive to more actively manage care.
Is managed care on the march in Australia?
Despite opposition from some, the logic of these techniques will
continue to make them attractive to governments and some more
progressive providers. However these steps will tend to be small,
fragmented and incremental until some more substantial building
blocks are in place. Each of these building blocks is, in the
author's opinion, worthwhile in itself and while they would not
automatically lead to more formal managed care systems, at least
some are necessary preconditions.
Better information
systems
Reaping many of the benefits of managed care and
outcomes management will require much better information on patient
usage of services. Linking financial, service and diagnostic
information will allow much more informed judgements to be made
about what works and what doesn't.
Outside hospital contexts there is little
systematic data collected on the clinical drivers of service use.
Without this data it is impossible to know why hospital admissions
are high, or why GP or pharmaceutical use is rising or falling. As
a result health policy is driven by advocacy and anecdote rather
than evidence. Recent initiatives by the Commonwealth such as the
Medicare Services Advisory Committee are attempting to introduce a
greater evidence basis into what services are subsidised.
Progress on diagnostic coding (where the reason
for each service is collected and recorded) is frustrated by a
multiplicity of possible systems. Each of these would allow
providers and policy makers to understand how much a case of
influenza or diabetes costs, and combined with a patient
identifier, how a patient moves through the health system. Coding
could occur at two levels of intensity. The broader, more detailed
and more costly approach would be to code each episode (for example
each visit to a GP). The provider would put a diagnostic code on
the patient's Medicare bill along with their provider number, and
this would be recorded on the patient's file. Alternatively,
patients could self-nominate to have a general indicator put as a
flag on their data. Such a system would also require improvement in
the use of the Medicare number as a unique patient identifier.
Thus people with diabetes, or asthma, could be
identified in MBS and PBS data. This would allow far better
understanding of usage patterns, and allowing some steps toward
automatic feedback and monitoring (if the HIC also had the
patient's address, they or their nominated provider could be
notified when an annual check-up was needed).
In a managed care context, diagnostic coding
allows better utilisation review (how are different doctors
treating children with asthma) and the development of better
risk-adjusters for capitation (how much do children with asthma, in
general, cost).
Such coding and collection of individual
diagnoses creates a host of privacy and confidentiality issues.
However, if in the long term the community could be reassured of
the security of the data there would be clear benefits in
developing better approaches to care. Some indicative data is
becoming available through the Bettering the Evaluation and Care of
Health (BEACH) program. A report on the first year of the program
(1998-99) has recently been released.
Risk-adjustment
If funding is pooled and devolved to regional
bodies, the distribution of the funds will need to be seen as
'fair'. Fairness is generally seen as compensating per-capita
allocations for likely differences in the population. An area with
an older population, or a high proportion living with AIDS, should
be funded to recognise and reflect the likely level of needs the
purchaser will need to meet. This compensation is called 'risk
adjustment'. The smaller the enrolled pool, the greater the need
for risk adjustment, as the purchaser has less scope to 'average'
costs. Under the current Australian system, for example, funds
distributed to States/Territories reflect the age distribution of
their populations. In the Coordinated Care Trials, funds from
Commonwealth and State budgets given to the trials reflected a mix
of demographic, clinical and financial data (such as diagnosis and
prior use of health services).
Good risk adjustment makes it less likely (but
does not guarantee) that purchasers will then:
-
- allocate funds fairly, reflecting need, as the purchaser knows
that they have been funded to meet those needs (and that high need
groups will get the services they need)
-
- recruit fairly (i.e. not exclude potentially expensive clients)
since they know that that they will be funded to meet their needs.
This is a problem faced even in existing public programs, perhaps
most notably those expensive cases of dual diagnosis, where the
patient/client is shunted between the health and
disability/community services system with each program trying to
avoid funding responsibility
-
- strive for excellence-to establish the best cancer service in
the state is self-defeating if the purchaser is not funded for the
services it provides.
There are ways to indirectly influence client
composition-for example private health insurers rarely advertise to
the aged and infirm-instead targeting younger consumers less likely
to need services.
Unfortunately, risk adjustment is still a very
inexact science. The Coordinated Care Trials have found it
difficult to predict future utilisation and costs. One approach
would be to offer purchasers a combination of a risk-adjusted
capitation amount and a payment based on actual use of
services.(49)
A good risk adjuster would make a purchaser's
capitation payment match expected expenditures. Expected
expenditures are the focus as the aim is to foster good behaviour
at recruitment time rather than predict perfectly actual
expenditures.
Provider
support
Providers, especially GPs, will need to be
persuaded to participate in any managed/integrated care
organisations. No government is likely to compel GPs to
participate, however, GPs may participate for several reasons.
First, the policy consensus is that while some intervention into
patterns of clinical care may be needed, it must be done by
doctors, not bureaucrats or accountants. Such clinical oversight
could also be achieved collegiately, perhaps via divisions of
general practice. The benchmark may well be the current provision
(s. 73BDA (2)(d)) for Medical purchaser-provider agreements in the
National Health Act which:
'require the organisation to maintain the
medical practitioners professional freedom, within the scope of
accepted clinical practice, to identify appropriate
treatments...'.
Second, enough GPs may be interested in getting
off the fee-for-service treadmill (at least partially) to focus on
community and preventive care. Thirdly, remuneration will have to
be sufficient. Governments may be more interested in supporting GP
incomes if it is not via an open-ended MBS, and if providers reap
some of the benefits of, for example, better prescribing practices.
Fourth, the justification for integrated care will have to be
better health, not lower costs. Better health in this context can
mean more equitable, consistent access to and utilisation of care.
Finally, GP support may come from realising that while change could
be resisted for some time, perhaps 5-10 years, eventually it may be
imposed from the outside in a far less flexible form.
The prospects for provider support are
reasonable, but not exciting. The AMA has already commenced its
campaign ('say NO to managed care') asserting that the Commonwealth
is about to introduce 'US Style Managed Care' which will restrict
patient choice, 'have power over doctors' and that funds will
'control costs by reducing quality'.(50) Many GPs
eventually supported many of the Coordinated Care Trials, and a
second round of these trials is now commencing. GPs are seeing that
not all 'planned' care is bad.
Consumer-friendly
models
No party or government will want to be seen to
be undermining Medicare. The Coordinated Care Trials had
significant difficulties recruiting clients to participate. This
was despite the Trials offering 'more' to clients who were already
high users of the system and who, presumably, were careful health
care consumers. Any model of integrated care will need to put as
few limits as possible on consumer access-and to be accepted will
need to be almost invisible to consumers. Consumer concern will act
as a valuable counterweight to managed-care enthusiasts. Some
proponents of managed care suggest introducing multiple
organisations that can then compete for
consumers.(51)
A more active private health
insurance industry
Until recently, the Australian private health
insurance industry has operated much like older indemnity funds in
the US-passively taking in premiums and paying out to providers.
There are now signs that the industry may be more interested in
change. There is reportedly more serious interest in the next round
of Coordinated Care Trials. Some funds have been trialing
innovative early discharge trials, under Commonwealth supervision.
If managed/integrated care is to develop, the industry will have to
take up the reforms with more enthusiasm.
Conclusions
Managed care concepts are already actively
discussed and tested in Australia. The extent to which managed care
emerges as a distinct model or program will depend on a complex
interaction of Commonwealth policies, health industry interest in
change and consumer attitudes. While demonising or dismissing the
benefits of managed care would needlessly undermine some useful
reforms, proponents of managed care also have some hurdles to clear
in order to show that the benefits will outweigh the costs.
The future of managed care in Australia will
depend on how well policy-makers can resolve the tensions
between:
-
- patient autonomy and the need to control access to
services
-
- clinical autonomy and the need to standardise care
-
- encouraging innovation and a cost-controlled environment,
and
-
- improved data and information and patient confidentiality.
The prospects for sensible reform appear
reasonable, but changes are likely to be gradual and piecemeal.
Endnotes
-
- Or more precisely, funder-purchaser-provider relationships
where government takes on an overall priority setting role as
ultimate funder of health. It then funds
purchasers (often departments or other agencies and
intermediaries) who are charged with defining and buying services
to meet these priorities from providers. In the Australian
system providers can be public or private, while purchasers are
mainly public. Purchasing could in the future be performed by
private agencies (such as health funds or non-government agencies).
In the Coordinated Care Trials, for example, the Trial auspice
takes on the purchasing role itself.
- D. K. P. Freeborn and R. Clyde, Promise and Performance in
Managed Care: The Prepaid Group Practice Model, Johns Hopkins
University Press, Baltimore, 1994.
- A. Birenbaum, Managed Care: Made in America, Praegar,
New York, 1997, p. 20.
- J. C. Lewis, Mapping International Health Challenges for
Managed Care, Summit on International Managed Care Trends
1999.
- A. Birenbaum, Managed Care: Made in America, Praegar,
New York, 1997, p. 16.
- D. K. P. Freeborn and R. Clyde, Promise and Performance in
Managed Care: The Prepaid Group Practice Model, op. cit., p.
3.
- ibid., p. 2.
- [Economist, 1999 #40]
- M. Gold, 'The Changing US Health Care System', The Milbank
Quarterly, vol. 77, no. 1, 1999; online at: http://www.milbank.org/quarterly/7701feat.html
- R. H. Miller and H. S. Luft, 'Does managed care lead to better
or worse quality of care?', Health Affairs, vol. 16, no.
5, 1997.
- G. F. Anderson and J-P. Poullier, 'Health spending, access, and
outcomes: trends in industrialised countries', Health
Affairs, vol. 18, no. 2, 1997.
- J. P. Newhouse, M. B. Buntin and J. D. Chapman, 'Risk
adjustment: taking a closer look', Health Affairs, vol.
16, no. 5, 1997; pp. 26-43.
- A. Birenbaum, Managed Care: Made in America, op. cit.,
p. 14.
- J. Richardson, Funding and Future Options for the Reform of
Medicare, Centre for Health Program Evaluation, 1998, p. 6.
- M. Gold, 'The Changing US Health Care System', op. cit.
- J. C. Lewis, Mapping International Health Challenges for
Managed Care, op. cit.
- G. O'Connor, 'A regional intervention to improve the hospital
mortality associated with coronary artery bypass graft surgery',
Journal of the American Medical Association, vol. 275, no.
11, 1996, pp. 841-846.
- M. Edlin, 'New DM approaches help keep costs entrapped',
Managed Healthcare, vol. 9, no. 12, 1999; pp. 940-45.
- Thanks to Jeff Richardson for this example.
- D. W. Emery, 'The coming transformation of managed care',
Managed Healthcare, vol. 9, no. 10, 1999; pp. 18-22.
- The Economist, 'On the critical list',. The Economist,
February 13 1999, pp. 69-70.
- J. C. Robinson, 'The future of the managed care organisation',
Health Affairs, vol. 18, no. 2, 1999; pp. 7-.
- S. Anderson, 'Integrated care-development and funding: thoughts
on integrated care', Healthcare Review online, vol. 2, no.
11, Sept 1998, at: http://www.enigma.co.nz/hcro_articles/9809/vol2no11_001.htm
- P. Brown, 'Integrated Care-development and funding: evaluating
integrated care demonstration sites', Healthcare Review
online, vol. 2, no. 11, Sept 1998; at: http://www.enigma.co.nz/hcro_articles/9809/vol2no11_003.htm
- ibid.
- S. Anderson, 'Integrated care- development and funding:
thoughts on integrated care', op. cit.
- Australian Healthcare Association, Submission to the Senate
Community Affairs References Committee into Public Hospital
Funding, AHA, 199, pp.18-19.
- see for example J. Paterson, National Health Care Reform:
The Last Picture Show, Department of Family Services,
Melbourne, 1996 and D. Marcus, Coordinating Care in an
Uncoordinated Health System: The Development and Implementation of
Coordinated Care Trials in Australia, Department of the
Parliamentary Library, Social Policy Group, 1999.
- A. Maynard, Rationing Health Care, Summit on International
Managed Care Trends, 1998.
- J. Richardson, Funding and Future Options for the Reform of
Medicare, op. cit.
- P. S. Craft, J. G. Primrose, J. A. Lindner, P. R. McManus,
'Surgical management of breast cancer in Australian women in 1993:
analysis of Medicare statistics', Medical Journal of
Australia, vol. 166, 16 June 1997; pp. 626-629.
- N. H. Council, A Better Health System for NSW, NSW
Government, Sydney, 2000, p. 58.
- M. Fletcher, The Quality of Australian Health Care: Current
Issues and Future Directions, Department of Health and Aged
Care, 2000.
- Australian Institute of Health and Welfare, Australia's
Health 1998, Canberra, AIHW, 1998, p. 289.
- Commonwealth Department of Health and Aged Care, Public and
Private-In partnership for Australia's Health, 1999, p. 59.
- D. Marcus, Coordinating Care in an Uncoordinated Health
System: The Development and Implementation of Coordinated Care
Trials in Australia, op. cit.
- C. Silagy, The Australian Coordinated Care Trials: Interim
Technical National Evaluation Report, Department of
Health and Aged Care, Canberra, 1999.
- National Prescribing Service, Annual Report 1998-99,
NPS, 1999.
- Commonwealth Department of Health and Aged Care, Public and
Private-In Partnership for Australia's Health, 1999.
- Commonwealth Department of Health and Aged Care, Pathology
Quality and Outlays Agreement, 1999.
- I. Lazarus, A. Wilson, A. Cullen, 'Australia pioneers new
directions in care management', Managed Healthcare, vol.
9, no. 12, 1999, pp. 26-28. Triage is the sorting of and allocation
of treatment to patients according to a system of priorities.
- Commonwealth Department of Health and Aged Care, Public and
Private-In partnership for Australia's Health, 1999.
- Diagnosis Related Groups (DRGs) are a way of classifying
surgical and medical interventions, based mainly on the principal
diagnosis.
- Department of Human Services V. Quality Improvement Funding
Round 1. 1999 http://www.dhs.gov.au/?? accessed on 3/2/2000.
- R. Scotton, Managed Competition: the Policy Context,
Melbourne Institute of Applied Economic and Social Research, 1999,
p. 15.
- R. Scotton, Managed Competition: the Policy Context,
op. cit.
- Commonwealth Department of Health and Aged Care, Health
Financing in Australia: The Objectives and Players, 1999, p.
7.
- Commonwealth of Australia, Australian Healthcare Agreement
between the Commonwealth and NSW 1998.
- P. Newhouse, 'Risk adjustment and Medicare: Taking a closer
look', Health Affairs, vol. 16, no. 5, 1997.
- Australian Medical Association, 'Say No to Managed Care', AMA
undated.
- R. Scotton, Managed Competition: the Policy Context,
op. cit .