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Strengthening the Rural Health Infrastructure

Purchasing Managed Care

For Public and Private Sector Employees in Rural Areas


Susan O'Loughlin Ward, Health Policy Consultant, Vienna, VA.

M.J. Burg, Manager for Health Care Benefits, R.R. Donnelley and Sons Company, Chicago, IL.

This session discussed how some employers are adapting so-called "value-based" purchasing methods, commonly found in urban areas, in restructuring their health benefits programs for workers in rural areas.

Susan Ward surveyed 8 States—California, Colorado, Maine, Minnesota, South Dakota, Washington, West Virginia, and Wisconsin—and reported the strategies used by these States to purchase managed care for public employees in rural areas. She found that they encountered a number of challenges in rural managed care contracting such as:

  • Lack of access to the full continuum of services.
  • Provider resistance to managed care.
  • Lack of competition (providers often have significant leverage)
  • Unstable networks.
  • Higher service costs.
  • Defining reasonable travel standards.
  • Lack of sufficient capability in managed care concepts, such as data collection.

M.J. Burg offered perspectives from a private, multi-State employer that operates printing plants in 11 rural communities. Over the past 3 years, R.R. Donnelly and Sons Company has, like many large employers, switched its employee benefits program from indemnity insurance to managed care. Among Donnelly's medical benefits purchasing strategies, Ms. Burg listed consistency and equity across locations as a key objective. Her company also seeks to:

  • Establish minimum standards for vendor selection and retention.
  • Focus on National Committee for Quality Assurance (NCQA) accreditation and Health Plan Employer Data and Information Set (HEDIS) reporting.
  • Identify health maintenance organizations (HMOs) that offer value from a cost/quality perspective and provide quality customer service.
  • Keep employee contributions relatively low.
  • Move to employee contribution strategy that encourages enrollment in "best value" plans.

Ms. Burg explained how their large employer purchasing clout served to improve the availability of health care resources in several key rural locations. Using comparative plan performance data from 1996, Ms. Burg showed that their self-funded plan was more cost efficient than the HMOs with which they contract, but she said they need to do more analysis to understand the cost differences.


Christianson JB, Hart JP. Importing Employer-Based Managed Care Initiatives In "Rural Areas: The Experience of South Dakota State Employees Group," Journal of Rural Health, 13(2):145-51.

U.S. General Accounting Office. Health Insurance Purchasing Strategies, GAO/HEHS-97-71, Executive Summary, May 6, 1997, pp. 1-7.

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