Is there a Future Is there a Future for Integrated Care for Integrated Care

Systems in the Systems in the Consumer Era?Consumer Era?AcademyHealth Annual Research AcademyHealth Annual Research

MeetingMeeting

June 6, 2004June 6, 2004

The Clinical and The Clinical and Economic Economic

Performance of Performance of Prepaid Group Prepaid Group

PracticesPracticesKenneth Chuang, MDKenneth Chuang, MD

Harold Luft, PhDHarold Luft, PhD

R. Adams Dudley, MD, MBAR. Adams Dudley, MD, MBA

Prepaid Group PracticesPrepaid Group Practices

There is theoretical rationale to There is theoretical rationale to believe that prepaid group practices believe that prepaid group practices (PGPs) might be more successful in (PGPs) might be more successful in implementing quality and efficiency implementing quality and efficiency initiatives than other systemsinitiatives than other systems

Prior comparisons of fee-for-service Prior comparisons of fee-for-service (FFS) plans to health maintenance (FFS) plans to health maintenance organizations (HMOs) have found organizations (HMOs) have found few difference in overall performancefew difference in overall performance

Health Maintenance Health Maintenance OrganizationsOrganizations

Receives a premium to cover a set of Receives a premium to cover a set of servicesservices

Accepts obligation to deliver or arrange Accepts obligation to deliver or arrange purchase of medically necessary servicespurchase of medically necessary services

2 current subtypes2 current subtypes Prepaid Group Practice (“delivery system Prepaid Group Practice (“delivery system

HMOs”) such as Kaiser Permanente and HMOs”) such as Kaiser Permanente and other staff- and group-model HMOsother staff- and group-model HMOs

Independent Practice Associations (“carrier Independent Practice Associations (“carrier HMOs”)HMOs”)

Types of HMOsTypes of HMOs Delivery system or staff/group modelDelivery system or staff/group model

Multi-specialty group practiceMulti-specialty group practice Mutually exclusive health plan partnersMutually exclusive health plan partners Providers are salariedProviders are salaried

Carrier modelCarrier model Often single specialty groups or solo practiceOften single specialty groups or solo practice Contracts with providers who may contract Contracts with providers who may contract

with many insurance carrierswith many insurance carriers Providers may share financial riskProviders may share financial risk

Fee-for-Service*Fee-for-Service* Patients have freedom of choice of providerPatients have freedom of choice of provider

No contract between insurer and doctorNo contract between insurer and doctor Physicians have freedom of choice in prescriptionPhysicians have freedom of choice in prescription Physician payment per service rendered (no Physician payment per service rendered (no

insurer control over physician income)insurer control over physician income) Direct fee negotiation between doctor and patientDirect fee negotiation between doctor and patient Physicians often practice in solo or small single Physicians often practice in solo or small single

specialty practicespecialty practice*Weller CD. *Weller CD. Iowa Law ReviewIowa Law Review. 1984. 1984

Characteristics of PGP that Characteristics of PGP that May Contribute to Improved May Contribute to Improved

Quality over FFSQuality over FFS Prepayment for a Defined PopulationPrepayment for a Defined Population

Creates budgetary certaintyCreates budgetary certainty Facilitates investment in re-organizationFacilitates investment in re-organization Provides financial incentive to optimizeProvides financial incentive to optimize Justifies outreach to patients (preventive)Justifies outreach to patients (preventive)

Institutional/Cultural InsulationInstitutional/Cultural Insulation Allows internal focus for overall quality Allows internal focus for overall quality

rather than individual specialtiesrather than individual specialties

Characteristics of PGP that Characteristics of PGP that May Contribute to Improved May Contribute to Improved

Quality over FFSQuality over FFS Group PracticeGroup Practice

Integrates specialties and settingsIntegrates specialties and settings Can create economies of scaleCan create economies of scale Allows for novel arrangements of careAllows for novel arrangements of care Benefits from shared governanceBenefits from shared governance Benefits from shared clinical data across Benefits from shared clinical data across

sitessites Can adjust supply of providers to meet Can adjust supply of providers to meet

demanddemand

Mitigating FactorsMitigating Factors

More Complete “Capture” of ProvidersMore Complete “Capture” of Providers Clinician autonomy versus shared Clinician autonomy versus shared

governance/central decision-makinggovernance/central decision-making

Measurement of PerformanceMeasurement of Performance No incentive for performance documentationNo incentive for performance documentation Limited choice of plans affect on satisfactionLimited choice of plans affect on satisfaction Spillover of PGP performance into local systemSpillover of PGP performance into local system

Mitigating FactorsMitigating Factors Larger ScaleLarger Scale

Economies of scale still may not be Economies of scale still may not be enough to overcome costs of enough to overcome costs of implementation of new technologiesimplementation of new technologies

One standard of care for all patients can One standard of care for all patients can lead to diseconomies of scalelead to diseconomies of scale

Stable Enrollee PopulationStable Enrollee Population Population is only relatively stablePopulation is only relatively stable

OtherOther Spread of PGP from original siteSpread of PGP from original site

Research ObjectiveResearch Objective

To determine whether prepaid To determine whether prepaid group practices deliver higher group practices deliver higher quality and/or more efficient quality and/or more efficient

clinical care than fee-for-clinical care than fee-for-service practicesservice practices

MethodsMethods PubMed literature search 1980 - present PubMed literature search 1980 - present

keywords: prepaid, prepaid group practice, managed care, HMO, Health keywords: prepaid, prepaid group practice, managed care, HMO, Health Maintenance organization, organized delivery system, PPO, fee-for-Maintenance organization, organized delivery system, PPO, fee-for-service, HMO market share, HMO market penetrationservice, HMO market share, HMO market penetration

Hand search of recent articles from Health Affairs, Health Hand search of recent articles from Health Affairs, Health Services Research, Inquiry, Journal of the American Medical Services Research, Inquiry, Journal of the American Medical Association, and Medical Care Association, and Medical Care

Initial literature search: 1146 studiesInitial literature search: 1146 studies Additional 97 identified from review of more recently Additional 97 identified from review of more recently

published articles and articles accumulated by authors for published articles and articles accumulated by authors for related publicationsrelated publications

Inclusion criteria: Peer reviewed studies that compare Inclusion criteria: Peer reviewed studies that compare performance of PGP to FFSperformance of PGP to FFS

Exclusion criteria: Inability to identify prepaid group practice Exclusion criteria: Inability to identify prepaid group practice as a subgroup of HMO within the studyas a subgroup of HMO within the study

MethodsMethods

All but 22 articles were excluded All but 22 articles were excluded Inability to distinguish PGP from HMO Inability to distinguish PGP from HMO

in generalin general 5 areas of comparison5 areas of comparison

Preventive CarePreventive Care Patient satisfactionPatient satisfaction Processes of CareProcesses of Care Clinical OutcomesClinical Outcomes Costs of careCosts of care

FindingsFindings

Clinical settings varied Clinical settings varied significantly – mortality in significantly – mortality in obstetric care to outpatient obstetric care to outpatient rheumatology arthritis rheumatology arthritis improvementimprovement

Costs: 3 studies showed PGP have Costs: 3 studies showed PGP have decreased imputed costs (~25%)decreased imputed costs (~25%)

Performance of Prepaid Performance of Prepaid Group Practices vs. Fee-for-Group Practices vs. Fee-for-

Service Health PlansService Health Plans# of Comparisons

PGP Better PGP = FFS FFS BetterDomains p<0.05 p>0.05 within 5% p>0.05 p<0.05

Preventive Care 15 3 4 0 0Patient Satisfaction 3 5 5 15 13Processes of Care 6 5 5 1 2Clinical Outcomes 1 10 11 4 1

Summary 25 23 25 20 16

Performance of Prepaid Performance of Prepaid Group Practices vs Fee-for-Group Practices vs Fee-for-

Service Health PlansService Health Plans# of studies

PGP Better PGP = FFS FFS Better

Domains p<0.05 p>0.05 within 5% p>0.05 p<0.05

Preventive Care 4 2 2 0 0Patient Satisfaction 2 1 1 4 5Processes of Care 5 2 3 1 2Clinical Outcomes 1 4 7 2 1

Summary 12 7 12 7 8

ConclusionsConclusions

Relatively little is known about the Relatively little is known about the performance of PGPsperformance of PGPs

PGPs are better at providing PGPs are better at providing preventive services than FFSpreventive services than FFS

FFS has higher patient satisfaction FFS has higher patient satisfaction than PGPthan PGP

Evidence to date shows no significant Evidence to date shows no significant difference in processes of care or difference in processes of care or outcomesoutcomes

ImplicationsImplications

Future research needs to Future research needs to separate HMO type separate HMO type

according to structural according to structural characteristics so that characteristics so that

policymakers can better policymakers can better understand relative understand relative

performanceperformance