Is there a Future for Integrated Care Systems in the Consumer Era?

1. Is there a Future for Integrated Care Systems in the Consumer Era? AcademyHealth Annual Research Meeting June 6, 2004

2. The Clinical and Economic Performance of Prepaid Group Practices Kenneth Chuang, MD Harold Luft, PhD R. Adams Dudley, MD, MBA

3. Prepaid Group Practices • There is theoretical rationale to believe that prepaid group practices (PGPs) might be more successful in implementing quality and efficiency initiatives than other systems • Prior comparisons of fee-for-service (FFS) plans to health maintenance organizations (HMOs) have found few difference in overall performance

4. Health Maintenance Organizations • Receives a premium to cover a set of services • Accepts obligation to deliver or arrange purchase of medically necessary services • 2 current subtypes • Prepaid Group Practice (“delivery system HMOs”) such as Kaiser Permanente and other staff- and group-model HMOs • Independent Practice Associations (“carrier HMOs”)

5. Types of HMOs • Delivery system or staff/group model • Multi-specialty group practice • Mutually exclusive health plan partners • Providers are salaried • Carrier model • Often single specialty groups or solo practice • Contracts with providers who may contract with many insurance carriers • Providers may share financial risk

6. Fee-for-Service* • Patients have freedom of choice of provider • No contract between insurer and doctor • Physicians have freedom of choice in prescription • Physician payment per service rendered (no insurer control over physician income) • Direct fee negotiation between doctor and patient • Physicians often practice in solo or small single specialty practice *Weller CD. Iowa Law Review. 1984

7. Characteristics of PGP that May Contribute to Improved Quality over FFS • Prepayment for a Defined Population • Creates budgetary certainty • Facilitates investment in re-organization • Provides financial incentive to optimize • Justifies outreach to patients (preventive) • Institutional/Cultural Insulation • Allows internal focus for overall quality rather than individual specialties

8. Characteristics of PGP that May Contribute to Improved Quality over FFS • Group Practice • Integrates specialties and settings • Can create economies of scale • Allows for novel arrangements of care • Benefits from shared governance • Benefits from shared clinical data across sites • Can adjust supply of providers to meet demand

9. Mitigating Factors • More Complete “Capture” of Providers • Clinician autonomy versus shared governance/central decision-making • Measurement of Performance • No incentive for performance documentation • Limited choice of plans affect on satisfaction • Spillover of PGP performance into local system

10. Mitigating Factors • Larger Scale • Economies of scale still may not be enough to overcome costs of implementation of new technologies • One standard of care for all patients can lead to diseconomies of scale • Stable Enrollee Population • Population is only relatively stable • Other • Spread of PGP from original site

11. Research Objective To determine whether prepaid group practices deliver higher quality and/or more efficient clinical care than fee-for-service practices

12. Methods • PubMed literature search 1980 - present • keywords: prepaid, prepaid group practice, managed care, HMO, Health Maintenance organization, organized delivery system, PPO, fee-for-service, HMO market share, HMO market penetration • Hand search of recent articles from Health Affairs, Health Services Research, Inquiry, Journal of the American Medical Association, and Medical Care • Initial literature search: 1146 studies • Additional 97 identified from review of more recently published articles and articles accumulated by authors for related publications • Inclusion criteria: Peer reviewed studies that compare performance of PGP to FFS • Exclusion criteria: Inability to identify prepaid group practice as a subgroup of HMO within the study

13. Methods • All but 22 articles were excluded • Inability to distinguish PGP from HMO in general • 5 areas of comparison • Preventive Care • Patient satisfaction • Processes of Care • Clinical Outcomes • Costs of care

14. Findings • Clinical settings varied significantly – mortality in obstetric care to outpatient rheumatology arthritis improvement • Costs: 3 studies showed PGP have decreased imputed costs (~25%)

15. Performance of Prepaid Group Practices vs. Fee-for-Service Health Plans # of Comparisons PGP Better PGP = FFS FFS Better Domains p<0.05 p>0.05 within 5% p>0.05 p<0.05 Preventive Care 15 3 4 0 0 Patient Satisfaction 3 5 5 15 13 Processes of Care 6 5 5 1 2 Clinical Outcomes 1 10 11 4 1 Summary 25 23 25 20 16

16. Performance of Prepaid Group Practices vs Fee-for-Service Health Plans # of studies PGP Better PGP = FFS FFS Better Domainsp<0.05 p>0.05 within 5% p>0.05 p<0.05 Preventive Care 4 2 2 0 0 Patient Satisfaction 2 1 1 4 5 Processes of Care 5 2 3 1 2 Clinical Outcomes 1 4 7 2 1 Summary 12 7 12 7 8

17. Conclusions • Relatively little is known about the performance of PGPs • PGPs are better at providing preventive services than FFS • FFS has higher patient satisfaction than PGP • Evidence to date shows no significant difference in processes of care or outcomes

18. Implications Future research needs to separate HMO type according to structural characteristics so that policymakers can better understand relative performance