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Integrated Delivery Systems In Managed Care

Emerging Issues for Policymakers

A Roundtable Discussion


Alan R. Weil, Executive Director, Department of Health Care Policy and Financing, Denver, CO.


Janet D. Olszewski, Division of Managed Care and Health Facility Development, Michigan Department of Community Health.

Robert E. Hurley, Ph.D., Department of Health Administration, Medical College of Virginia.

Mr. Weil discussed issues relating to managed care and integrated delivery systems (IDSs) that State policymakers are facing now or are likely to confront in the immediate future. He advised that States should treat the various kinds of plans/entities similarly according to the function they perform in the marketplace.

Mr. Weil also suggested that there is power in the State's purchasing dollar (e.g., Medicaid, public employees' health insurance) and that States can show that they care about quality and price. Given the number of enrollees in State-sponsored programs, the State can often affect the organization of the entire market. He believes that States also need to work on developing risk adjustment methods for Medicaid to reduce the financial incentives health plans have to avoid enrolling more costly individuals.

Dr. Hurley's observations on "points made and missed" included the following:

  • We don't have great continuity in health care with the average employer turning over 25 percent per year of their insured employees to a new provider entity.
  • We have to remember these are "enrollment-based" health systems not population-based and that commercial health maintenance organizations (HMOs) are not necessarily "community-based" or "community-influenced." Dr. Hurley used his community in Virginia as an example of very little local control in health care. This speaks to giving the established medical "empire" its due and allowing it to come forward in developing IDSs or other new entities.
  • We need innovation and States need to promote innovative initiatives. Regulation by its nature often can be an inhibitor of innovation or an obstacle to new models.
  • There is more commercialism yet to come in health care. For example, single-specialty contracting is big in some markets.
  • States have to be attentive and realize that the locus of responsibility may change as health plans and provider networks enter into contracts with various parties.

Ms. Olszewski's summary points included the following:

  • Regulating provider service networks (PSNs) is a highly contentious issue in some States.
  • HMOs are having a big impact in some areas but haven't fundamentally changed how care is delivered.
  • Regarding the "balance of power" notion, the question to ask is whether IDSs will change the balance of power. It is important to assess how the various regulating and purchasing strategies may shift dollars and the locus of decisionmaking (e.g., from insurers to providers, from government to consumers).
  • Medicaid is a huge buyer. If States want to encourage local control of health care they may have to make some allowances for unregulated entities. National companies can often come in and do the necessary network development in a timely way to respond to a Request for Proposal (RFP). But if you want to foster "community-based" care, you have to find a way to do that with your purchasing power. For example, Michigan allowed unlicensed entities initially, then helped them through the licensing process.
  • It is important to consider your State budget and service delivery issues before making regulatory decisions.

Current as of March 1997

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Internet Citation:

Integrated Delivery Systems in Managed Care: Challenges to State Oversight. Workshop Summary, March 24-26, 1997. User Liaison Program, Agency for Health Care Policy and Research, Rockville, MD.

The information on this page is archived and provided for reference purposes only.

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