MANAGED CARE: Market Penetration Impacts FFS Patients
Managed care is impacting the way physicians treat all their patients, even the ones not enrolled in managed care plans, according to a study published in today's Journal of the American Medical Association. Dr. Laurence Baker of Stanford University examined Medicare expenditures over a four-year period in 802 regions with high HMO market penetration. He predicted that "[p]hysicians conditioned to function in a managed care environment may find themselves" operating with a "managed care mindset." He found that between 1990 and 1994, increases in HMO market share were associated with decreases among Medicare fee-for-service expenditures. As managed care market penetration climbed from 10% to 20%, Baker found that Medicare Part A expenditures dropped 2% and Medicare Part B expenditures fell 1.5%. And "[a]s HMO market share increases, the effect becomes larger." An increase in the market share from 20% to 30% precipitated a 2.5% decrease in Part A expenditures and a 1.6% drop in Part B expenditures. Calling attention to the "spillover effects" of managed care, Baker advocated more analysis of the "system-wide effects of managed care," speculating that "increases in managed care could lead to reductions in hospitalization rates, lengths of stay, or specialist referrals, even among physicians who treat mostly or only fee-for-service patients" (Baker, JAMA, 2/3 issue). In an accompanying editorial, Princeton University economist Uwe Reinhardt notes that the findings can be explained by the fact that "the typical physician will have settled on a preferred practice style that is applied to all patients, regardless of their insurance status" (JAMA, 2/3 issue).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.