STATEMENT for a diagnosis or even a proper diagnosis. Consequently, the outcome of people's care is widely believed to STATEMENT SUMMARY have not been developed for most of these consumer "rights" issues, the Congressional Budget Office (CBO) quality that was being provided under this new system of managed care. Some have suggested that man- be the best indicator of quality. A high-quality episode of health treatment would then involve being treated estimated that for a mental health parity amendment in H.R. 3103 (introduced in 1996) a 4 percent increase aged care has brought costs under control by denying necessary care. This belief has led to a tremendous %108 Introduction according to a method that restores the individual's health in the shortest amount of time at the lowest level in health insurance premiums would lead to 800,000 fewer people having health insurance. 8 In a general push by consumer advocates for the regulation of MCOs to ensure quality. Despite the success attributed to managed care in slowing the increases in medical care costs, managed care of"risk. Even under this definition, there is no clear way to measure quality because different individuals analysis of increases in health insurance premiums for employers, The Lewin Group estimates that a one has come under intense scrutiny. Physicians, consumer advocates, and some policymakers believe that some respond to treatments in very different ways. Thus, it is difficult to agree on one definition of quality that percent In the last increase decade,in substantial employer premiums changes have wouldoccurred lead to in an the additional health care 400,000 market. individuals Many of being these uninsured. changes were The of managed regulations care's that success have in been controlling introducedcosts canhas justbeen as easily achieved be categorized by denying as necessary access measures medical services. or provider EBRI fits all circumstances. This in turn makes measuring quality even more complex. prompted Thus, if the byregulation employers of who health wereplans no longer has even able aor relatively willing to small acceptimpact the relatively on costs, large a significant annual number increases ofin protections as they can be categorized as quality measures. The determination of whether the regulations However, employers and managed care organizations argue that managed care has eliminated much of the people could potentially lose health insurance coverage. Access could be reduced for some in order to increase medical care costs that occurred during the late 1980s and early 1990s. The fee-for-service system ofreim- discussed in this report actually improve the quality EMPL ofO health YEE care provided depends on one's definition of wasteful spending in the health care market while still maintaining the quality of the care provided. In fact, bursing health care providers was one of the causes attributed to these substantial increases. 1 Under this Me theasu satisfaction ring @mlity of those who still have insurance. In addition, health plans and their sponsors contend that quality. If a definition only addresses access and BENEFIT consumer satisfaction, these regulations might provide the research thus far shows that managed care plans as a whole provide quality of care equal to that pro- system, these regulations providers would were reimbursed reduce quality retrospectively , because plans for and the services sponsors they would performed. have limited Thus, ability providers to steer did not some vided improvement in fee-for-service in quality.12 plans. However, if the definition of quality refers to the outcome of a health care RESEARCll Studies that attempt to measure quality can be classified into three categories: (1) structure, (2) process, and have patients economic to higher incentives quality to providers control costs and to orenforce to perform protocols only services for treating for which variousthediseases benefits that outweighed have proven the to treatment, these regulations are of questionable value. While they do address consumer rights, it is debar- INSTITUTE c,0 (3) outcomes. 4 Structure studies examine the characteristics of the providers or institutions of care such as be the most effective methods for treating these diseases. costs or risks. In addition, the fee-for-service system tended to focus on the treatment of illnesses as opposed able whether these rights are necessary considering the expense they add to the provision of health care Once the discussion of health care turns to quality, a question arises concerning what quality is in the health to their prevention. As employers searched for methods to reduce annual health care cost increases to a providers' credentials or hospitals' teaching status. In process studies, the methods that providers use to coverage. 13 care market. Quality is a multidimensional concept. Even though individuals may agree on its components, make Regulati treatment ons of decisions Health C are are evaluated Plans through, for instance, the investigation of the use of specific proto- manageable level, they turned to managed care as their vehicle for providing health benefits to their employ- they may disagree on their relative importance. cols ees. or They a treatment embraced 's appropriateness. managed care because Outcome this analysis system provides measures financial the patient incentives 's resulting to control health costs, status e.g., or While these regulations' effect on quality depends on one's definition of quality, the effect on costs is clear patient paymentssatisfaction. to providers However are structured , a complete to reward measurean of efficient quality level mustofevaluate care suchallasthree a capitated of these payment dimensions. (a fixed A Managed cafe's new dominance in the health care market has changed the organization, financing, and regardless of the definition of quality--an increase. As stated before, any increases in costs will almost Some irMividuaIs equate access with quality. Others would include in their definition of quality how respect- fee to cover all services provided), salaries, and bonuses. Furthermore, managed care organizations (MCOs) measure delivery of of health quality care. based These on structure changes ishave not worthwhile prompted discussion if it cannotofbe theshown potential to lead needto for superior additional outcomes con-, certainly increase the number of uninsured. Consequently, these regulations would come at price. Thus, the fTtlly their providers deal with them, to develop a consumer satisfaction definition of quality. However, an have developed guidelines for the treatment of various illnesses to promote more efficient care. These while an outcome measure is not complete if the process that was used to achieve the outcome is unknown. sumer protections or rights within this new structure. Health care consumers are worried about any restric- choice is between regulation that would increase access and consumer "rights" but would be of questionable individual's satisfaction may not directly correlate with receiving the most appropriate care for a diagnosis or" incentives and guidelines, designed to reduce expenditures for unnecessary utilization, have been the pri- tions onProgress their access is being to physicians made in measuring and to various the quality forms of ofcare care (e.g. provided , emergency in managed room care care, plans. experimental The Health value in relation to the quality of outcomes versus allowing market forces to improve quality through experi- even a proper diagnosis. Conseque Writt ntly, en thS etat outcome ement of care of Craig is widelyCop believed eland to be an indicator of quality in mary factors in the success attributed to managed care. This system in turn has led to significantly smaller Plan treatments) EmployerandData aboutand their Information ability to Set dispute (HEDIS) deniedhasclaims continued or services. to be refined In addition, by the potential National limitations Committee on mentation. Recent experimentation has led to some competition on quality through the use of such quality health care. A high quality episode of health treatment would then involve being treated under the method increases in medical care costs in recent years. Today, managed care plans have become the overwhelmingly for providers Quality , such Assurance as so-called (NCQA) "gag to rules" furnish and a more network multidimensional participation rules report , have card also on the come quality under ofscrutiny, care pro- indicators as HEDIS, but the level of the quality of care provided still remains a hotly debated topic. that restores the individual's health in the shortest amount of time at the lowest level of risk. Even under this Research Associate because dominant they typehave of health the potential care coverage to undermine for the nonelderly the physician population /patient relationship. because of their success in controlling vided by managed care plans. HEDIS allows purchasers of health plans to compare managed care plans definition, there is no clear way to measure quality because different individuals respond to treatments in very costs. that are included in this report card of quality. Currently, HEDIS focuses on structure and process measures Endnotes different ways. Thus, it is difficult to agree on one definition of quality that fits all circumstances, which Employee Benefit Research Institute of In quality. response However to real, oras perceived advances negative in outcome reactions measures to managed have been care, made state , HEDIS lawmakers has expanded have proposed its reliance and on makes measlzring quali(v all the more complex. Despite its success in slowing increases in medical care costs, managed care has come under intense scru- outcome measures. These advances are difficult because a large number of factors can affect the outcome of passed many laws or imposed regulations that claim to provide protections for managed care plan partici- 1 The tremendous growth in technological innovations in health care is another important cause attributed a tiny. health Physicians care treatment, , consumerandadvocates, there is a and needsome to control policymakers for all ofbelieve the factors that that part could of managed affect acare's measure success when in pants and to increase the quality of care. These measures are commonly referred to as anti-managed-care to the increases in medical care costs. Studies that attempt to measure quality can be classified into three categories: structure, process, and controlling costs has been achieved by denying necessary for medical services. In addition, many consumer it legislation is compared by the across managed plans care or providers. industry, A because significant they drawback would limit to HEDIS-type or forbid certain report activities card measures that are of 2 outcomes. Robert HBecause . Miller, quality and Harold has many S. Luft,dimensions, "Does Managed a complete Care Lead measure to Better of quality or Worse cannotQuality fall into of just Care,"one of advocates contend that employers and health plans are more concerned with reducing costs than with th quality ought istothat be used they by lead managed plans orcare providers plans while to focus forcing resources the plans on the to factors perform that other arenew measured or additional , diverting activi- Healt theseh dimensions Affairs (September but The needs /October House to ,include Ways 1997): all and three. 7-25;Me and A an measure s Robert Subcomm of H. quality Miller ittee and basedHarold on onstructure H S. ealth Luft, is "Managed not worthwhile Care if increasing resources from the quality factors of that care areprovided. not measured. Consequently, Consequently policymakers , any report havecard responded of this type by introducing must balance numer- ties. State lawmakers introduced over 1,000 bills relating to health plans by mid-year 1997, of which 20 Plan it cannot Performance be shown Since to lead 1980: to good A Literature outcomes, Analysis while ,an " outcome Journal measure of the American is not complete Medical Associatio if the process n (May that 18, ous comprehensiveness legislative proposals againstat both understandability the state , and federal so that level purchasers to regulate get an theaccurate operationdepiction of managed of the care quality plans. a percent were enacted. 9 Federal lawmakers have also introduced legislation in this area, using either single- 1994): 1512-1519. was used to achieve the outcome is unknown. Consequently, in order to get a clear picture of the quality of certain issue However, proposals plan employers provides or comprehensive and in aMCOs mannerargue packages that that is easy managed such to as understand. the care Patient has maintained Access to Responsible health care Care qualityActwhile (PARCA) eliminat- (S. 3 health For acare moreprovided thorough , a discussion measure must of quality evaluate in the all health three dimensions. care market, see William Custer, "Measuring the Hearing on ing 644/H.R. much 1415) of the introduced wasteful spending by Rep. in Charles the health Norwood care (R-GA) market. and In fact, Sen. Alfonse the research D'Amato thus (R-NY). far shows that Quality of Health Care," EBRI Issue Brief no. 159 (Employee Benefit Research Institute, March 1995). This "Assessing Health Care Quality" Quality managed o/'care Managed plans, Care as a Plans whole, provide quality of care equal to that provided in fee-for-service plans. 2 section Progress draws has been from made that report. toward the goal of measuring the quality of care provided in managed care plans. Furthermore, employers contend that managed care's success in reducing costs has allowed them to continue Discussion of Regulations of Health Plans 4 The Avedis Health Donabedian Plan Employer , "The Data QualityandofInformation Care: How Can Set (HEDIS) It be Assessed? has ,continued " Journalto of be the refined American by theMedical National To to provide date, a comparison health benefits of the forquality their employees. of managed Yet, caredue plans to managed relative to care fee-for-service opponents' doubts plans has about not the produced quality Association Committee for (September Quality Assurance 23-30, 1988): (NCQA) 1743-1748. for the purpose of providing multidimensional report card on the evidence systemthat provides, these two many planemployers types are require uniformly that different managed in care eitherplans a positive prove they or a negative provide high way. quality A review by Consumer 5 Miller and advocates Luft, Healt and h some Affairs,policymakers 1997. believe that more regulation and increased liability exposure these plans' quality. HEDIS allows purchasers of health plans to compare managed care plans that are Miller health and care.Luft These 5 of demands various studies have focused comparing a great the deal quality of attention of HMOs in versus the marketplace fee-for-service on plans the development points out, of Washington, D.C. would G included Thereincrease appears in this the report to quality be some card.of limited Currently care health evidence , HEDIS plansthat provide. focuses HMOs on In provide structure addition lower , and these quality process groups of measures care contend for chronic that of quality. mandating physical How- quality measures that both employers and consumers will find easy to understand. "HMOs produce better, the same, and worse quality of care, depending on the particular organization and patients ever, as ' advances right to have in outcome coveragemeasures for the services have been of any madephysician , HEDIS they has expanded choose would its reliance also enhance on outcome quality of conditions. However, this has not been universally Februarydemonstrated 26, 1998 (Miller and Luft, Health Affairs, 1997). particular disease." Thus, HMOs are not providers of high or low quality per se but range from good to poor, measures. care. 7 Michael They L. maintain A Millenson, significant this "Beyond drawback opinion because the to Managed HEDIS legislation type-report Care Backlash: in these card areas measures Medicine would of ingreatly quality the Information reduce is that any they Age existing lead ," Health plans barri- or with This strengths statement and looks weaknesses at quality in in the the health care of care particular market diseases. as well 6asTherefore, the potential measures effects of of quality regulations are ers to the physician/patient relationship. However, plan sponsors and health plans contend that these providers to focus resources on the factors that are measured, diverting resources from those that are not Priorities Project Policy Report No. 1 (Washington, DC: Progressive Policy Institute, July 1997). needed ("consumer to evaluate protections") individual on health health plans plansin in terms termsof of costs various and the diseases number and of conditions uninsured. rather In addition, than more it measures measured. would Consequently increase, costs any report and thus cardreduce of thisthe type ability must ofbalance employers comprehensiveness and unions to provide against health understand- ben- s The CBO has subsequently cautioned that this estimate cannot be generalized to all mandates on health discusses the impact of these various regulations on quality in the health care market. broadly efits as well defined as individuals categories.' ability to afford employer-sponsored health coverage. Consequently, more ability, so that purchasers get an accurate depiction of the quality a certain plan provides in a manner that insurance, because people may place different values on other mandates, which would affect the number of individuals would become uninsured. Furthermore, health plans argue that an increase in mandates would is easy to understand. employers continuing to offer health insurance and the number of people taking it up. Quality 3 It is important to note that the current debate on the quality of care in the health care market is not new to reduce individuals' choices among plan types. Under the proposed mandates, individuals who may not want 9 "1998 Industry Outlook: Quality," Healthcare Trends Report (January 1998). the a certain presentbenefit managed wouldcare be forced era. AstoMillenson pay for it7if points they choose out, The to New have York any coverage. Times ran The features same on idea the would failingshold of The quality of managed care plans relative to fee-for-service plans has not been demonstrated to be uniformly 10 Millman & Robertson conducted an analysis of PARCA, which contains many of these regulations, for doctors The true perception for and plan hospitals sponsors that health in in the their care United decisions costs States aretounder offer in 1976, health control and benefits. a and 1982 /or President's the belief that Commission MCOs reduce report costs concluded by denying that different in either a positive or a negative way. Thus, HMOs are not low or high providers of quality per se Wal-Mart and determined that health insurance premiums would increase between 7 percent and 39 per- as much as 35 percent of some high-tech hospital care was unnecessary. Thus, Millenson concludes that necessary care has led many health care market observers to question the quality these organizations but range from good to poor, with strengths and weaknesses in the care of particular diseases. Therefore, cent. However, they did not examine the health plan liability issue. Muse & Associates also examined "deep provide. public IIowever, dissatisfaction once the with discussion unfettered of health doctor care andturns hospital to quality, autonomy a question led to the arises explosive about what growth defines in Regulations and mandates for "consumer protections" are not a gnarantor of increased quality in the health quality measures are needed to evaluate individual health plans for various diseases and conditions rather PARCA in a study funded by members of the Patient Access to Responsible Care Alliance and determined managed superior quality care in in thethe first health place." care market. Quality is a multidimensional concept. Thus, even though care than market, for broadunless ly definquality ed categories is defined . as easier access for those with health insurance. However, if quality is that health insurance premiums would increase between 0.7 percent and 2.6 percent. defined individuals as successful may agree outcomes on the components, resulting from theyhealth may not services agree provided, on their relative these regulations' importance. effect Therefore on quality , is 11 Roger Feldman, Bryan Dowd, Scott Leitz, and Lynn A. Blewett. "The Effect of Premiums on the Small Quality in need of altd further Regulatio research. _zs of Health The regulations Plans would have some impact on the costs of health benefits and analysts disagree not only on how to measure quality but also on how it is defined. Consequently, policy Regulations and mandates for "consumer protections" are not a guarantor of increased quality in the health Firm's Decision to Offer Health Insurance," Journal of Human Resources (Fall 1997): 635-658. decisions on health care quality should be based on an evaluation of a particular law's actual effect as insurance. This impact has been estimated to be relatively small to substantial, depending on the interpre- care market, unless quality is defined as easier access for those with health insurance. However, if quality is _2 In Miller and Luffs ( JAMA, 1994) review of managed care quality studies, they found that HMO enroll- The views expressed in this statement are solely those of the author and should not be attributed to the Proponents opposed ration of to theits of mandates the stated various goal andor regulations the intent. assumptions This of health distinction based plans onisargue that important interpretation that these because ) regulations a ° law Despite thatwill the addresses increase wide range access the quality ofor defined as successful outcomes of health services provided, the effect of these regulations on quality is in ees were generally satisfied with their care. However, HMO enrollees appear to be less satisfied with the Employee Beuefit Research Institute, or the EBRI Education and Research Fund, its officers, trustees, estimates, of health care. any increases However, in if these the cost regulations of health benefits are to be could truly have considered serious quality implications of care for measures, the likelihood they should of consumer rights does not necessarily address the quality of care a consumer receives. Ultimately, whether a need of further research. However, the regulations will have some impact on the costs of health benefits and quality of their care relative to fee-for-service plan enrollees. Yet, in terms of satisfaction with financial sponsors, or other staff, or to the EBRI-ERF American Savings Education Council. The Employee Benefit guarantee that health care consumers will receive a higher quality of health care. The regulations might small businesses offering health benefits. Feldman et al. 11 estimated that in the state of Minnesota, a $1 law insurance. truly addresses The impact quality has been will depend estimated in large to bepart relatively on an small individual's to substantial subjective , depending opinion of on what the interpreta- quality aspects of the plan, HMO enrollees were more satisfied than fee-for-service plan enrollees. Thus, some Research Institute is a nonprofit, nonpartisan, public policy research organization which does not lobby or entails. increase lower obstacles in monthly to access premiums to certain would types leadoftocare an that approximate insured decrease individualsof 0.017 may or in may the proportion not need. They of small might tion of the mandates and the assumptions derived from that interpretation. Consequently, as studies show, patients appear to be willing to trade some quality satisfaction for lower costs. take positions on legislative proposals. also even increase a small increase insured individuals in the costs ' satisfaction. of health insurance In addition, could providers lead to a of sizable healthnumber care would of individuals gain protections without establishments (with fewer than 50 employees) offering health insurance. Consequently, if these regulations 13 A survey by the Kaiser Family Foundation and Harvard University found overwhelming support (72 raise the costs of health insurance significantly, a potentially sizable number of individuals could be without Defining from various @mlitechniques tv that some MCOs use to limit the way providers practice medicine. Yet, the regula- health insurance, especially employees of small businesses. percent in favor) for the consumer bill of rights endorsed by President Clinton. However, if the bill of rights health tions would insurance, do very especially little to ensure employees improvement of small businesses. in the outcomes of health care treatments administered by were to increase monthly premiums by $15 to $20, the support erodes tremendously (only 28 percent would medical providers. Therefore, policymakers need to thoroughly understand the effects of these regulations on Some individuals equate access with quality. If they can choose freely among providers, they believe they favor) See Kaiser Family Foundation/Harvard University. National Survey of Americans' Views on Consumer Conclusi the health on care market. are receiving quality health care. However, these consumers may not choose the providers who can treat Protections in Managed Care (The Henry J. Kaiser Family Foundation: January 21, 1998). them most effectively, whereas a managed care plan may provide an incentive for the consumer to use Access, consumer satisfaction, and provider protections are important components of the health care market, providers The health who careare market most qualified has undergone to treatsigmificant them. However change , the in the reverse last decade. situation One could of the alsomost occur. significant Other but improvements in these components would not necessarily improve the overall quality of health care. changes individualshas would been the include huge inshift theirfrom definition fee-for-service of qualityto how managed respectfully care fortheir healthproviders care coverage. deal withThis them. change However, they would increase costs, which could have serious consequences in terms of the number of was precipitated by the tremendous increases in health care costs. During the shift to managed care, health Here again, an individual's satisfaction may not directly correlate with receiving the most appropriate care uninsured individuals. Although estimates of the impact of the cost increases on the number of uninsured cost increases have abated. As costs appeared to be under control, many observers began questioning the 4