Survey Reveals Wide Variations In HMO Decisions On Coverage Of New Medical Technologies

December 05, 1996

Health Maintenance Organizations (HMOs) are generally less likely to cover expensive but effective new medical technologies than equally effective, but less expensive technologies, according to results of a national survey published in the Dec. 5 issue of The American Journal of Managed Care. One of the first systematic, national studies of HMO decision making on coverage of new medical technologies, the survey also found that the type of HMO (staff, group, network, independent practice association) and the method of physician payment (salary, fee-for-service, capitation) influence the type of medical technology covered.

Neil R. Powe, M.D., associate professor of medicine at The Johns Hopkins University School of Medicine; Gerard F. Anderson, professor of health policy at The Johns Hopkins School of Hygiene and Public Health; and Claudia A. Steiner, M.D., of the Agency for Health Care Policy and Research, asked 395 HMOs to respond to questions about their coverage of laser technology used in 15 different procedures, including laser angioplasty, laser discectomy and laser photodynamic therapy. Lasers were selected as the focus of the survey questions because of the technology's widespread use among medical specialties. Forty percent, or 159 HMOs, responded.

HMO coverage of the technologies varied substantially, ranging from 25% to 90%. Staff models (HMOs that hire physicians as employees of the HMO) covered three to four fewer laser technologies than did independent practice association models. Staff models also had more rigid controls on coverage and more strongly limited access to newer medical technologies.

Physicians practicing in organizationally "looser" HMOs, such as independent practice associations, and in HMOs incorporating financial risk-sharing arrangements with physician members, appear to have wider latitude in the use of new medical technologies, according to Powe.

"What this study shows is that we are in a new era of health care where cost has become a factor for those who make decisions about whether people should have access to new medical technologies," said Powe. "If only cost-neutral and cost-saving technologies are approved for coverage, then the use of technologies with enhanced health outcomes but higher costs may be discouraged. Although managed care's use of cost effectiveness in medical coverage decisions to improve efficiency is laudable, it may be necessary to ensure that access to beneficial technology and quality of care is maintained."

For a copy of the survey, or to interview Powe, contact Gary M. Stephenson at 410-955-5384.

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Johns Hopkins Medicine

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