New CDC office tracks managed care expansion

New ways of paying for care change the rules

Predicting a continued rapid expansion of managed care, the Centers for Disease Control and Prevention in Atlanta has added a program to address the trend and recently issued a report profiling the industry.1 The assessment of the managed care phenomenon by the CDC included the following overview:

* The financing and delivery of health care in the United States are rapidly evolving, and the term managed care covers a variety of arrangements that continue to be adapted and developed. The four entities involved in the financing and delivery of health care are the individual consumer, the provider of care, the insurer who reimburses for care, and the purchaser of the care.

* Alternative arrangements for the financing and delivery of health care focus on the relationships among the four entities. The term managed care can include health maintenance organizations (HMOs), preferred provider organizations (PPOs), and utilization review. HMOs are the most fully developed managed care organizations and those most amenable to prevention initiatives.

* HMOs are rapidly becoming a major source of health care for the beneficiaries both of employer-funded care and of the publicly funded programs, Medicaid and Medicare. U.S. enrollment in HMOs grew from 6 million people in 1976 to 51 million in 1994.

* Enrollment in HMOs grew 11% in 1994 alone. This increase in managed care has been greatest in health insurance funded by employers. In 1994, only 37% of people employed by organizations with 10 or more employees remained in traditional fee-for-service indemnity plans; 23% were enrolled in HMOs. For employers with more than 500 employees, health care costs declined in 1994 for the first time in a decade. The decrease resulted almost entirely from a shift of health insurance from traditional fee-for-service indemnity plans to less costly managed care plans.

* State governments also are converting to managed care for Medicaid programs, which provide care to the poor and disabled. States particularly have been concerned about Medicaid beneficiaries' lack of access to primary care providers and their over-reliance on expensive emergency department care, which lacks continuity and is expensive. In June 1994, 43 states reported having at least one managed care program for Medicaid recipients. As of that date, 7.8 million (23%) of Medicaid beneficiaries were enrolled in managed care, compared with 14% in 1993.

Reference

1. Centers for Disease Control and Prevention. Prevention and managed care: Opportunities for managed care organizations, purchasers of health care, and public health agencies. MMWR 1995; 44(RR-14):1-12. *