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Integrated Delivery Systems In Managed Care

Challenges to State Oversight

Summary of a Workshop for State and Local Health Officials


This workshop was designed to help participants understand the function of provider-sponsored integrated delivery systems (IDSs) in a system of managed care and to examine State roles in overseeing them. The workshop sought to help participants develop rational approaches to the public policy issues raised by the emergence of these systems for States, including licensing, quality assurance oversight, public purchasing issues, and community accountability. It was held in Boston, Massachusetts, March 24-26, 1997.

About the Workshop Sponsor.


Overview

The U.S. health care system is undergoing profound changes that are affecting the way most Americans receive their care. Public and private payers are demanding more value for their health care dollar. Managed care organizations (MCOs) are forming, consolidating, and expanding into more markets across the country. Health care providers are trying to squeeze costs out of their systems, while maintaining or improving the quality of care delivered.

The U.S. population enrolled in MCOs has risen steadily over the last 15 years. In 1995, nearly 70 percent of all workers in firms of more than 200 workers were enrolled in some form of managed care based on an employer survey. In 1995, about a third of all Medicaid recipients and 1 in 10 Medicare beneficiaries were enrolled in managed care arrangements, more than double the figures from just a few years ago, according to the Health Care Financing Administration (HCFA). This growth is expected to continue as employers narrow workers' options to managed care plans, States enroll more Medicaid recipients into managed care plans, and the Federal Government seeks to increase Medicare managed care enrollment.

Even as managed care becomes the dominant form of health care delivery in this country, it is neither clearly defined nor static. MCOs include everything from traditional health maintenance organizations (HMOs) to preferred provider organizations (PPOs), utilization review firms to specialized managed care companies for behavioral health care. In turn, each of these organizations is evolving in response to demands from the marketplace. Most plans are developing point-of-service products, traditional HMOs are creating provider networks to give enrollees more choice of physicians, and plans are merging in order to gain market clout.

In many communities, providers are beginning to form networks to compete for managed care contracts. These new organizations are adding more acronyms to the health care lexicon:

  • Physician-hospital organizations (PHOs).
  • Provider-sponsored organizations (PSOs).
  • Integrated service networks (ISNs).
  • Community care networks (CCNs).

For the purposes of this workshop, we call them integrated delivery systems (IDSs) to emphasize one of their primary goals.

More important than the names they are called is the promise they offer for more coordinated care across the continuum of health services and settings, and the confusing set of issues they present to policymakers:

  • How much financial risk can they assume?
  • Should they be allowed to contract directly with purchasers on a risk basis?
  • How can their quality of care be assessed and assured?
  • Should these entities be licensed under separate categories from those that currently exist in State law?
  • Which State agencies have jurisdiction over them and how should they divide and coordinate oversight responsibility?
  • To what extent should they be held accountable to their communities and how can this be achieved?

Beyond these immediate concerns lies an even bigger unknown:

  • Will these organizations ultimately evolve into HMOs or PPOs or will they retain their role as partners with HMOs and PPOs?

Objectives

This workshop was designed to help participants understand the function of provider-sponsored IDSs in a system of managed care and to examine State roles in overseeing them. The workshop sought to help participants develop rational approaches to the public policy issues raised by the emergence of these systems for States, including licensing, quality assurance oversight, public purchasing issues, and community accountability.

The specific objectives of the workshop were to:

  • Review recent trends in the managed care marketplace and explain how the development and growth of IDSs fit into these changes.
  • Identify responsible purchasing guidelines for consideration by State agencies that directly contract with IDSs.
  • Discuss how States might license, regulate, or otherwise sanction certain types of IDSs, especially those that assume financial risk.
  • Explore techniques for monitoring the performance of IDSs in delivering quality health care.
  • Explore how State agencies and their counterparts at the local level, can work together to oversee IDSs and ensure that these organizations are publicly accountable.

The workshop provided several opportunities for participants to interact with each other and discuss problems facing their own States. It featured a set of break-out groups, designed to give participants an opportunity to develop solutions to a set of challenges faced by a representative State in overseeing IDSs. It closed with a round table discussion of how State policymakers can protect the public but remain flexible in response to the fast-changing market in which IDSs operate.

Participants

The participants for this workshop included senior policymakers in legislative and executive branches of State government, as well as officials from various health agencies, who wanted to enhance their understanding of IDSs and make informed decisions about their purchasing and oversight roles. Among them were economists and epidemiologists, managed care administrators for medical assistance divisions, directors of planning and health policy commissions, fiscal analysts, long-term care program directors, commissioners from State health departments, as well as representatives of State and local public health departments and offices of rural health policy.

Workshop Sessions

 

The User Liaison Program (ULP) disseminates health services research findings in easily understandable and usable formats through interactive workshops. Workshops and other support are planned to meet the needs of Federal, State, and local policymakers, and other health services research users, such as purchasers, administrators, and health plans.

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