Managed care organizations focus on quality, but face challenges

November 13, 2000

University Park, Pa. --- Pressured by negative public opinion and policymakers, some managed care organizations are moving toward instituting quality improvement programs, but may face serious barriers in implementing them, says a new study.

"A backlash against managed care organizations (MCO), which include HMOs, has been voiced loudly by the public , the media, patient advocacy groups and physicians. The most common perception is that MCOs offer poor quality service and less access to good health care," says lead author Dr. Dennis Scanlon, assistant professor of health policy and administration at Penn State. "Some of the recent legislative debates have focused on passing a patients' bill of rights to ensure high quality care, but genuine success for incorporating quality improvement into health care may require more than broad regulations or legislation."

The researchers conducted interviews with the medical directors, chief executive officers and quality improvement directors for 24 health plans in four states: Pennsylvania, Maryland, Kansas and Washington.

Their findings are published in the November/December issue of the journal Medical Care Research and Review. Funding support came from the Agency for Healthcare Research and Quality.

Strong incentives for MCOs to engage in quality improvement do exist, with pressure coming from accreditation organizations and public purchasers of health care such as Medicare and Medicaid, according to the study.

While MCOs are not required to seek accreditation, which involves meeting set performance measurements, many do because their major clients will sign up only with such accredited groups. Of all the accreditation organizations, the National Committee for Quality Assurance (NCQA) seems to be the most influential, even for plans they do not accredit, the team says.

Also, public purchasers are requiring plans to demonstrate quality improvement more so than private purchasers such as corporate employers.

The study also found that several health care plans are restructuring themselves with institutional oversight boards for quality improvement (QI) and high-level managers dedicated to QI. Practicing physicians are involved in varying degree. Plans are slowly developing the necessary technical QI tools such as data collection, analysis, performance measurement and implementation of appropriate change.

Scanlon warns that there appears to be significant variation in the quality improvement programs of various HMOs. "Some plans have very elaborate and sophisticated quality programs that have existed for years, while others are just beginning the process. Either way, the public needs to be aware that managed care plans, particularly HMOs, are not completely ignoring quality issues.

"But at the same time, we find that MCOs currently face some important barriers to achieving strong, efficient QI programs," Scanlon notes. "First, there is a lack of clear consensus among doctors, administrators, patients, policymakers and the public about how best to ensure quality in health care. Health care involves many people and activities, and may be conducted at several sites. It cannot be compartmentalized and the quality of health care is challenging to be measured.

Another barrier appears to be what is most desired in the marketplace. "Overall, MCO administrators believe that price alone still drives most decisions to purchase health care," Scanlon said. "Contracts are written around money, not quality, so how do you properly motivate physicians and health care administrators? If quality is to be successfully maintained, it needs to be rewarded." Additional regulation is an alternative to voluntary quality improvement programs, say the researchers, but burdensome regulation may result in higher costs for compliance and slower improvements due to bureaucracy.

Theoretically, compared to the traditional fee-for-service programs, MCOs have greater ability to improve quality because they can profile and affect provider practices, to monitor treatment and outcomes for large groups of patients, to determine patient needs and assess their satisfaction, and to mount large-scale quality improvement activities. However, consumers continue to challenge the quality of health care delivered by MCOs and prefer less structured networks, despite the weaker linkages between plans and providers, the study said.

"So, what it boils down to is what the health care market values, 'choice' or 'quality'?" Scanlon says. "Perhaps the future challenge is to better understand and manage the incentives for MCOs to ensure that quality has its appropriate place. Our findings are based on a non-random sample of plans, so additional research is needed to determine whether the findings are generalizable beyond our sample, but hopefully, our findings initiate a discussion on an important issue facing the U.S. health care system."
In addition to Scanlon, the researchers are Elizabeth Rolph, RAND Corporation, Santa Monica, Calif.; Charles Darby, Agency for Healthcare Research and Quality; and Hilary Doty, graduate student in health policy and administration.

EDITORS: Dr. Scanlon is at (814)865-1925 or by email.

Penn State

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