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Objective: This article reports the experiences of health plans, providers, and consumers with California’s mental health parity law and discusses implications for implementation of the 2008 federal parity law. Methods: This study used a multimodal data collection approach to assess the first five years of California’s parity implementation (from 2000 to 2005). Telephone interviews were conducted with 68 state-level stakeholders, and in-person interviews were conducted with 77 community-based stakeholders. Six focus groups included 52 providers, and six included 32 consumers. A semistructured interview protocol was used. Interview notes and transcripts were coded to facilitate analysis. Results: Health plans eliminated differential benefit limits and costsharing requirements for certain mental disorders to comply with the law, and they used managed care to control costs. In response to concerns about access to and quality of care, the state expanded oversight of health plans, issuing access-to-care regulations and conducting focused studies. California’s parity law applied to a limited list of psychiatric diagnoses. Health plan executives said they spent considerable resources clarifying which diagnoses were covered at parity levels and concluded that the limited diagnosis list was unnecessary with managed care. Providers indicated that the diagnosis list had unintended consequences, including incentives to assign a more severe diagnosis that would be covered at parity levels, rather than a less severe diagnosis that would not be covered at such levels. The lack of consumer knowledge about parity was widely acknowledged, and consumers in the focus groups requested additional information about parity. Conclusions: Experiences in California suggest that implementation of the 2008 federal parity law should include monitoring health plan performance related to access and quality, in addition to monitoring coverage and costs; examining the breadth of diagnoses covered by health plans; and mounting a campaign to educate consumers about their insurance benefits. (Psychiatric Services 60:1589–1594, 2009)

There is ample evidence that many clinical decisions made by physicians are inconsistent with current and generally accepted evidence. This leads to the underuse of some efficacious diagnostic, preventive or therapeutic services, and the overuse of others of marginal or no value to the patient. Evolving new payment and delivery models place greater emphasis on the provision of evidence-based services at the point of care. However, changing physician clinical behaviors is likely to be difficult and slow. Policy makers therefore need to design interventions that are most effective in promoting greater evidence-based care. To help identify modifiable factors that can influence clinical decisions at the point of care, we present a conceptual model and literature review of physician decision making. We describe the multitude of factors--drawn from different disciplines--that have been shown to influence physician point-of-care decisions. We present a conceptual framework for organizing these factors, dividing them into patient, physician, practice site, physician organization, network, market, and public policy influences. In doing so, we review some of the literature that speak to these factors. We then identify areas where additional research is especially needed, and discuss the challenges and opportunities for health services and policy researchers to gain a better understanding of these factors, particularly those that are potentially modifiable by policymakers and organizational leaders.

Despite strong interest in improving care for high-risk elders, demonstration projects typically show negative results. This paper examines one large foundation-sponsored initiative to ga...

Despite efforts to reduce hospital utilization and length of stay, hospital care continues to account for a substantial portion of total health care expenses (Levit et al. 2002; Agency for Healthcare Research and Quality 2000). In addition, spending on hospital care is on the rise once again. In 2000, hospital inpatient and outpatient services accounted for 43 percent of the growth in total health care spending, more than twice the share of the 1999 increase (Strunk, Ginsburg, and Gabel 2001). Over the past three decades, public and private purchasers turned to managed care plans to stimulate greater hospital competition and reduce hospital expenditures and costs.1 Two techniques managed care plans used to achieve these goals were selective contracting and utilization management. As we discuss further in the background section, these techniques and other market dynamics weakened hospitals' negotiating leverage with plans. The purpose of this paper is to provide a recent but longitudinal description of managed care plan–hospital contracting. In particular, the paper focuses on hospitals' market power in contract negotiations with plans.2 Plan–hospital negotiations continue to be a critical nexus where competitive market forces meet in the managed care world, with significant implications for the organizations involved, the patients and communities they serve, and health care expenses. Market power is defined as the degree of control or influence an organization has over another organization (Scott 1987; Emerson 1962).3 Control or influence is shaped by the willingness and ability of one organization to sanction (i.e., punish or reward) another organization that it interacts with to attain key goals, such as survival, growth, or increased margins. The origin of market power is the dependency one organization has on the resources controlled by another. Two specific questions about hospitals' market power are addressed in this paper. First, how has hospitals' negotiating leverage with managed care plans changed from 1996 to 2000? Second, what factors explain any changes in hospitals' negotiating leverage between 1996 and 2000? Our findings suggest that many hospitals' negotiating leverage increased significantly since 1996, with the largest gains occurring over last two years. While almost all hospitals were “contract takers” in 1996, some hospitals are now “contract makers or breakers.” The negotiating leverage of other hospitals has improved as well, although less dramatically. Two types of evidence support this conclusion. First, serious contract disputes were much more frequently reported in 2000 compared with 1996. The prevalence of these disputes across diverse markets signals hospitals' increased willingness to exercise market power, as well as their assessment that they have the ability to do so given current market conditions. We observed contentious disputes in 7 out of 12 markets, and reports of other serious contract disputes throughout the country have appeared in the trade literature (for example, see Benko and Bellandi 2001). In some cases, hospitals terminated contracts, a behavior unheard of in the mid-1990s. Second, different types of respondents all perceived that hospitals were “winning” disputes. They noted that hospitals have been able to secure payment rate increases and significantly influence other contract terms. While there is variation across markets and within the hospital sector, a major change over the past five years is that many hospitals are now willing, and successfully able, to exercise market power in contract negotiations. We argue that between 1996 and 2000, significant changes in three areas converged to increase hospitals' market power: the policy and purchasing context in which plan–provider contract negotiations take place, the managed care plan market, and the hospital market. We identify specific changes in each of these three areas noted by interview respondents and largely supported by secondary quantitative data and describe how they impact hospitals' negotiating leverage with plans. Our findings are consistent with prior research. Many previous studies documented factors that result in plans' increased negotiating leverage with hospitals. This recent, longitudinal study shows that many of these factors are still important but that the direction of change has reversed, shifting market power back to many hospitals. These findings also provide insight into why hospitals are now more willing to exercise market power; hospitals may have had some ability to exercise market power several years ago but they did not use it. Recently, hospitals' increased financial distress and a sense of opportunity converged, leading them to exercise their leverage with plans.

During the past decade many health plans adopted risk-contracting arrangements that transferred substantial financial risk and care management responsibility to physician groups and hospital-sponsored integrated delivery systems. Risk transfer arrangements are now believed to be in steep decline, but there is little empirical evidence on this topic, particularly at the local-market level. Data from the Community Tracking Study were used to examine changes in risk contracting from 1996 to 2000. A decline in reliance on risk contracting is evident in nearly all markets. However, retrenchment in risk contracting has followed different patterns ranging from refinements in the scope of risk transfer to reduced use of risk arrangements to total rejection of risk-sharing arrangements. Modified risk-transfer agreements remain viable in several markets, but continued refinement in the nature and scope of risk sharing will be necessary.

This article develops a framework for understanding how financial and nonfinancial incentives can complicate point-of-care decision-making by physicians, leading to the overuse or underuse of healthcare services. By examining the types of decisions that clinicians and patients make at the point-of-care, the framework clarifies how incentives can distort physicians’ decisions about testing, diagnosis and treatment, as well as efforts to enhance patient adherence. The analysis highlights contributing factors that promote and impede evidence-based decision-making, using examples from the ‘Choosing Wisely’ program. It concludes with a summary of how the existing fee-for-service payment system in the USA may contribute to the problems of over- and under-testing, diagnosis and treatment, highlighted through the efforts of Choosing Wisely.

This article reviews the recent research, policy and conceptual literature on the effects of payment policy reforms on evidence-based clinical decision-making by physicians at the point-of-care. Payment reforms include recalibration of existing fee structures in fee-for-service, pay-for-quality, episode-based bundled payment and global payments. The advantages and disadvantages of these reforms are considered in terms of their effects on the use of evidence in clinical decisions made by physicians and their patients related to the diagnosis, testing, treatment and management of disease. The article concludes with a recommended pathway forward for improving current payment incentives to better support evidence-based decision-making.

Despite the growth of managed care in the United States, there is little information about the arrangements managed-care plans make with physicians.In 1994 we surveyed by telephone 138 managed-care plans that were selected from 20 metropolitan areas nationwide. Of the 108 plans that responded, 29 were group-model or staff-model health maintenance organizations (HMOs), 50 were network or independent-practice-association (IPA) HMOs, and 29 were preferred-provider organizations (PPOs).Respondents from all three types of plan said they emphasized careful selection of physicians, although the group or staff HMOs tended to have more demanding requirements, such as board certification or eligibility. Sixty-one percent of the plans responded that physicians' previous patterns of costs or utilization of resources had little influence on their selection; 26 percent said these factors had a moderate influence; and 13 percent said they had a large influence. Some risk sharing with physicians was typical in the HMOs but rare in the PPOs. Fifty-six percent of the network or IPA HMOs used capitation as the predominant method of paying primary care physicians, as compared with 34 percent of the group or staff HMOs and 7 percent of the PPOs. More than half the HMOs reported adjusting payments according to utilization or cost patterns, patient complaints, and measures of the quality of care. Ninety-two percent of the network or IPA HMOs and 61 percent of the group or staff HMOs required their patients to select a primary care physician, who was responsible for most referrals to specialists. About three quarters of the HMOs and 31 percent of the PPOs reported using studies of the outcomes of medical care as part of their quality-improvement programs.Managed-care plans, particularly HMOs, have complex systems for selecting, paying, and monitoring their physicians. Hybrid forms are common, and the differences between group or staff HMOs and network or IPA HMOs are less extensive than is commonly assumed.

To provide better value and improve patient care in the U.S. health care system, comparative effectiveness research (CER) needs to be disseminated, implemented, and interpreted. This brief, the second from Mathematica’s Center on Health Care Effectiveness, examines how to put CER into use at the point of care, focusing on knowledge translation, provider incentive reform, delivery system transformation, and consumer engagement.

This report investigates provider payment methods in Massachusetts. Payments include fee-for-service, the predominant model; global payments, which pay providers a single fee for all or most required services during a contract period; and pay-for-performance models, which layer quality incentives onto payments.

Background Variation in the quality of ambulatory care may be a key factor in explaining disparities in health, and these disparities have large cost implications. Purpose This study identified differences in hospitalization rates for elderly African-American and white Marylanders for eight ambulatory care–sensitive conditions (ACSCs). It assessed the relative contribution of race to disparities in preventable hospitalizations after controlling for demographic and socioeconomic factors as well as underlying prevalence. It also estimated the excess cost associated with these disparities. Methods Using prevention quality indicator specifications from the Agency for Healthcare and Research Quality applied to 2006 Medicare claims data, eight ACSC hospitalization measures were developed for 569,896 Maryland Medicare beneficiaries. The analysis was conducted in 2008. A Poisson regression model identified race, age, gender, and income as factors associated with differences in ACSC hospitalization rates. Excess costs were estimated from excess hospitalizations of African Americans and the median cost per admission. Results African Americans had significantly higher rates of ACSC hospitalizations than whites for five of eight conditions after controlling for demographic, socioeconomic, and geographic factors. Excess costs from disparities in quality ranged from $8 million (heart failure) to $38,000 (urinary tract infection). Conclusions Race may be a key predictor of preventable hospitalizations for some ACSCs. Racial disparities in these hospitalizations represent excess costs to Medicare. Because ACSC admissions are potentially preventable with optimal ambulatory care, improving care for minority populations may reduce disparities and lower hospital costs.

This study systematically identified and profiled the content and use of AHRQ’s grant funded research on health care costs, productivity, organization, and market forces. The report provides evidence that the research findings have had an impact on policy debates, although much of that impact depends on individual investigator initiative in disseminating the findings. The authors identify steps to enhance returns from current investments in research and make a better case to policymakers on its importance.

This study systematically identified and profiled the content and use of AHRQ’s grant funded research on health care costs, productivity, organization, and market forces. The report provides evidence that the research findings have had an impact on policy debates, although much of that impact depends on individual investigator initiative in disseminating the findings. The authors identify steps to enhance returns from current investments in research and make a better case to policymakers on its importance.

Despite strong interest in improving care for high-risk elders, demonstration projects typically show negative results. This paper examines one large foundation-sponsored initiative to gain insight on why success often is so elusive. The findings indicate that specific flaws in concept, design, and implementation each make it more challenging for demonstrations to achieve their intended goals, especially those involving cost and utilization reductions. We speculate that part of the reason for this is that organizational and political processes lead to fundamentally conservative demonstrations that assume that small amounts of resources directed at incremental change can be effective in generating substantial change in organizations and can do so rapidly.

Background:Fordecades,reformersarguedthatmedical groups can efficiently provide high-quality care and acollegialprofessionalenvironment.Thegrowthofmanaged care and the movement to improve quality provide additional reasons for physicians to practice in groups, especially large groups. However, information is lacking on recent trends in group size and the benefits of and barriers to group practice. Objectives:To identify benefits of and barriers to large medical group practice, and to describe recent trends in group size. Design, Setting, and Participants: Information on benefits and barriers was obtained from 195 interviews conducted during round 3 (2000-2001) of the Community Tracking Study with leaders of the largest groups, hospitals, and health insurance plans in 12 randomly selected metropolitan areas. Information on recent trends in group size was obtained from more than 6000 physicians in private practice in 48 randomly selected metropolitan areas via Community Tracking Study telephone surveys in 1997-1998, 1998-1999, and 2000-2001. Main Outcome Measures: Benefits of and barriers to large group practice, as perceived by interviewees, and changes in percentages of physicians in groups of varying sizes. Results: Gaining negotiating leverage with health insurance plans was the most frequently cited benefit; it wascited8timesmoreoftenthanimprovingquality.Lack ofphysiciancooperation,investment,andleadershipwere the most frequently cited barriers. Survey data indicate that 47% of private physicians work in practices of 1 or 2 physicians and 82% in practices of 9 or fewer, and that the percentage of physicians in groups of 20 or more did not increase between 1996 and 2001. Conclusions: Current payment methods reward gainingsizetoobtainnegotiatingleveragemorethantheyreward quality. However, barriers to creating large medical groups are substantial, and most private physicians continue to practice in small groups, although the size of these groups is slowly increasing. Arch Intern Med. 2003;163:1958-1964

For more than a century, physicians in private practice in the United States maintained autonomy from hospitals, using the facilities as their “workshops” in mutually beneficial arrangements with no formal financial ties (Pauly and Redisch 1973; Starr 1982; Stevens 1989). With the rapid growth of health maintenance organizations (HMOs), selective contracting, global capitation, and other provider risk-sharing arrangements from the late-1980s to the mid-1990s, many physicians and hospitals developed new and more closely aligned financial and legal relationships, often emphasizing primary care physician (PCP) services. Hospitals anticipated that close affiliation with or employment of PCP gatekeepers would enhance their market power, help them capture capitation contracts, and help them manage costs under these contracts. In the past few years, interest in these selective HMO networks and in risk contracting has declined, as expectations for the future growth of managed care have waned and an emphasis on fee-for-service payments has returned. To date, there is no nationally representative information available on recent developments in hospital–physician relationships in the new market environment. This paper discusses findings from the third round of the Community Tracking Study's (CTS) biannual site visit interviews, conducted in 2000 and 2001, with hospitals and physician organizations in 12 randomly selected metropolitan markets. We assess recent trends in hospital–physician relationships for the 12 markets as a whole, but also examine market-level variation in these trends, and identify key market characteristics associated with this variation. We find that hospitals are now focused on developing relationships with selected specialists in local markets—establishing joint ventures and enhancing hospital–specialist collaboration through clinical initiatives in high-profit service areas. Our interviews confirm general impressions and recent case study evidence of the reduced focus on hospital–PCP arrangements (see, for example, Engbert and Emery 1999 and Ray and Kirz 2000). However, most hospitals in the 12 visited markets continue to own PCP practices. Primary care ownership remains especially prevalent in highly consolidated hospital markets, where PCP groups are reluctant to be independent of major systems and where the systems themselves worry about losing patient referrals to competing systems by divesting from these practices. Emerging hospital–physician relationships represent both the old and the new in today's markets. Efforts to build clinical ties between hospitals and specialists appear to be a return to a previous era, while formal financial arrangements, such as joint ventures, are more of a contemporary development. Thus far, hospitals are keeping their existing PCP practices, but are looking at new ways to make them financially viable.

Provider organizations have evolved to function as intermediaries between managed care plans and individual providers. These organizations assume much financial risk and care management responsibilities. We profile the characteristics of these organizations in markets across the country. The data, taken from a 1999 telephone survey of sixty-four entities in twenty markets and from interviews conducted during site visits to four markets, highlight the youth of many of these organizations, the large financial risk and functional responsibilities they bear, and the mixed views they hold about the health plans they contract with in terms of their willingness to delegate the authority, support, and collaboration that accompany risk. Policymakers need to evaluate what this means for oversight of managed care.

Provides a timely profile of how managed care plans—especially those at financial risk—structure their networks and pay providers, finding that contractual arrangements between plans and providers are complex and diverse across and within networks. Furthermore, HMO contracts with intermediate entities usually involve transferring a substantial degree of provider risk through capitation.

Extraordinary growth in managed care arrangements over the past decade has been both widely praised and criticized. Proponents and critics agree that the nature of medical practice is being profoundly altered by this growth, even if they cannot articulate the direction and consequences of this change. We explore the roots of this uncertainty by examining the available evidence on critical features of the arrangements managed care plans currently have with affiliated physicians. Our approach is to review and synthesize the literature in several key substantive areas from a broad range of sources. We found that existing knowledge is dated, derived from a limited subset of plans, inattentive to important structural diferences between plans, and responsive to a very naorow set of issues poorly rflecting the range of medical practice and change introduced by managed care We highlight key questions of interest and the knowledge gaps critical to address so that policy and management decisions can both reflect and be informed on these issues that define the arrangements managed care plans make with physicians and ultimately influence medical practice.

In recent years, health plans have developed measures of health service resource use to assess efficiency of care physicians and other providers deliver primarily relying on tools commonly known as "episode groupers."

Looks at the characteristics and responsibilities of organizations that mediate risk and care management responsibility between managed care organizations and individual providers, finding that some are experiencing serious financial problems.

Provides a timely profile of how managed care plans—especially those at financial risk—structure their networks and pay providers, finding that contractual arrangements between plans and providers are complex and diverse across and within networks.