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Designing Healthcare Systems That Work for People With Chronic Illnesses & Disabilities
Healthcare Trends Affecting Special Needs
Robert Hurley, Ph.D., Associate Professor, Medical College of
Virginia, Virginia Commonwealth University, Richmond, VA.
The fast-changing healthcare environment has a direct impact on
the opportunities and potential of service delivery and financing systems.
Managed care was spawned by private purchasers, who saw it as a way to
get better value by decreasing costs while holding outcomes constant. Now those purchasers are losing confidence in managed care as multiple
factors drive healthcare costs and managed care organization (MCO) premiums
upward; these factors include the insurance cycle, increased regulations,
provider consolidation creating countervailing leverage against the purchasing
power of MCOs, and (perhaps most significantly) increased use of medical
services, especially prescription drugs.
Dr. Hurley noted that future
debates will center on "who lost cost containment?"
The public sector's use of managed care began much more recently,
especially in Medicare and for special-needs populations within Medicaid.
Congress has been very ambivalent about whether the Medicare population
should participate at all, according to Dr. Hurley. State and Federal
policymakers have been cautious about including special-needs populations
in Medicaid managed care. Concerns center around several issues:
- The "jury is still out" on disability/illness-specific programs, as
most specialized plans are still fairly new. Progress is being made,
but models tend to be limited in scope and scale.
- Technical problems—such as risk adjustment, dual eligibility,
benefit-design issues, and case management models/authority—are
- Evidence of managed care's benefits is still limited.
- MCOs tend to think in a conservative medical model, making innovation
Recent developments suggest that "reasonable" expectations may need
rethinking, both by State policymakers and by MCOs considering bidding
for contracts. MCOs withdrawing from Medicare have been particularly troubling.
In 1999, 45 MCOs withdrew from the program, affecting 407,000 beneficiaries.
The number of commercial MCOs serving Medicaid beneficiaries has also
dropped, although not as precipitously as in Medicare.
of managed care in the public sector include:
- Purchasers who want to both bash and buy managed care.
- Hostile political environments.
- A "Christmas tree mentality," in which purchasers increase expectations
without aligning payment or resources/support to make these expectations
- Unrealistic beliefs that MCOs can subsidize the cost of serving public
sector clients with private sector dollars.
- The sense of little control caused by the volatility of the market.
Health Care Financing Administration. Medicare+Choice: Policy concerns,
implications, and prescription for change. Baltimore (MD): Health Care
Financing Administration; 1999 May.
Gold M, Smith A, Cook A, et al. Medicare managed care: preliminary analysis
of trends in benefits and premiums, 1999-1999. Washington (DC): Mathematica
Policy Research, Inc. 1999 Jun.
Felt-Lisk S. The changing Medicaid managed care market: Trends in commercial
plans' participation. Washington (DC): Mathematica Policy Research, Inc.
for Kaiser Commission for the Future of Medicaid and the Uninsured. 1999
Brown RS, Gold MR. What drives Medicare managed care growth? Health Aff
Laschober MA, Neuman P, Kitchman MS, et al. Medicare HMO withdrawals:
what happened to the beneficiaries? Health Aff 1999 Nov/Dec;18(6):150-7.