Decision making in managed care organizations : implications for the development and diffusion of new technologies : final report

237 Pages·2000·9.3 MB·English

by  Haber, Susan G

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HEALTHECONOMICSRESEARCH,INC.
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Decision Making in Managed Care
Organizations:
Implications for the Development and
Diffusion ofNew Technologies
FinalReport
Preparedby:
SusanG.Haber,Sc.D.
JerryCromwell,Ph.D.
GregoryC.Pope,M.S.
SonjaHoover,M.P.P.
HealthEconomicsResearch,Inc.
Preparedfor;
HealthCareFinancingAdministration
May26,2000
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SusanG.Haber,Sc.D. NancyT.McCall,Sc.D.
ProjectDirector ScientiHcReviewer
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11
TableofContents
Page
ExecutiveSummary ES-1
Chapter1 Introduction 1-1
1.1 ConceptualModel 1-1
1.2 OverviewofStudyDesign 1-6
1.3 OrganizationoftheReport 1-10
Chapter2 LiteratureReview 2-1
2.1 ImpactofManagedCareonHealthCareSpendingGrowth 2-1
2.2 ImpactofTechnologyonHealthCareSpendingGrowth 2-7
2.3 ImpactofManagedCareontheAdoptionofTechnologies 2-9
2.4 ImpactofManagedCareonResearchandDevelopment
InvestmentDecisions 2-16
2.5 StudyHypotheses 2-19
Chapter3 CaseStudiesMethods 3-1
3.1 ManagedCareOrganizations 3-1
3.2 DeviceandPharmaceuticalManufacturers 3-19
Chapter4 CaseStudiesofTechnologyCoverageDecision
MakinginManagedCareOrganizations 4-1
4. Introduction 4-1
4.2 WhoMakesTechnologyCoverageDecisions? 4-4
4.3 WheneireTechnologyCoverageDecisionsMade? 4-7
4.4 HowAreTechnologyCoverageDecisionsMade? 4-9
4.5 CoverageofInvestigational/ExperimentalTechnologies 4-17
4.6 DoTechnologyCoveragePoliciesVaryAcrossProducts? 4-19
4.7 DoTechnologyCoveragePoliciesVaryAcrossMarkets? 4-20
4.8 ExternalInfluencesonCoverageDecisions? 4-23
4.9 HowisUtilizationofTechnologyControlled? 4-30
4.10 InteractionwithHospitalDecisionMaking 4-33
4.1 InteractionwithDecisionMakingbyLargePhysicianGroups 4-38
4.12 Summary 4-40
Chapter5 CaseStudiesofBenefit,Premium,andCostSharing
DeterminationinManagedCareOrganizations 5-1
5.1 Introduction 5-1
5.2 BenefitDetermination 5-2
5.3 PremiumandCostSharingDetermination 5-12
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1
TableofContents
(continued)
Page
Chapter6 CaseStudiesofDeviceManufacturers 6-1
6.1 Introduction 6-1
6.2 MajorUnderlyingFactorsInfluencingDemandforDevices 6-3
6.3 InfluenceofScienceonR&DSpending 6-7
6.4 DirectandIndirectPurchasersofTechnologies 6-10
6.5 ManufacturerPerceptionsofAreasofSignificantManaged
CareImpact 6-13
6.6 FactorsLimitingtheImpactofManagedCareonTechnology 6-16
6.7 RoleofCostEffectivenessinManagedCareCoverageDecision
Making 6-19
6.8 ManufacturerPerceptionsoftheFutureofCommercialManaged
Care 6-23
6.9 ManufacturerPerceptionsofImportanceofMedicareManaged
Care 6-25
6.1 ManufacturerPerceptionsRegardingtheImportanceofFee-for-Service
Medicare 6-31
6.1 Summary 6-38
Chapter7 CaseStudiesofPharmaceuticalManufacturers 7-1
7.1 Introduction 7-1
7.2 MajorUnderlyingFactorsInfluencingDemandforDrugs 7-3
7.3 ManufacturerProblemswithDirectandIndirectPurchasersof
NewDrugs 7-4
7.4 DrugCompanyR&DStrategies 7-7
7.5 DrugManufacturerPerceptionsofManagedCare 7-10
7.6 DrugManufacturerPerceptionsofMedicareManagedCare 7-15
7.7 Summary 7-18
Chapter8 ImplicationsforResearchonManagedCareand
Technology 8-1
8.1 Introduction 8-1
8.2 SynthesisofCaseStudyFindings 8-2
8.3 DirectionsforFutureResearch 8-21
8.4 Conclusion 8-25
References
Appendix1: ParticipantList
Appendix2: InterviewProtocols
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TableofTablesandFigures
Page
Chapter1
Figure1-1 InteractionofTechnology,InsuranceandHealthCareSpending 1-2
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Acknowledgments
Organizingthecasestudyinterviewsonwhichthisreportisbasedwasachallenging
process,requiringpatience,persistence,organizationalskill,andgoodhumor. Weare
gratefultoSuzanneDonoghueofHealthEconomicsResearch,Inc.(HER)andFredBentley
(formerlyofHER)forbringingagoodmeasureofallfourqualitiestothistask. Theyalso
providedvaluableassistanceinconductinginterviews. Weappreciatetheguidanceprovided
byTechnicalAdvisoryGroup,RobertHurley,Ph.D.,AlisonKeith,Ph.D.,andMr.Robert
Moliter. NancyT.McCall,Sc.D.ofHERprovidedhelpfulcommentsonanearlierdraftof
thisreportandthroughouttheproject. WealsothankDawnP.Belleville,LmdaThompson,
andNormaDiVitofortheirsupportinproducingthisreport.
Thisresearchwouldnothavebeenpossiblewithoutthecooperationofthemany
organizationsthatagreedtoparticipateinourcasestudies. Weareindebtedtothemfor
takingtimetomeetwithusandforsharingtheirinsightsonthese importantissues.
Followingisalistoftheparticipatingorganizations:
AccordHealthPlan
BlueShieldofCalifornia
BlueCrossBlueShieldofMassachusetts
BlueCrossBlueShieldTechnologyEvaluationCenter
BostonScientific
BrighamandWomen'sHospital
BristolParkMedicalGroup
CatholicHealthPartners
CenterforHealthDisputeResolution
CIGNAHealthcare(nationalheadquarters)
CIGNAHealthcareofCalifornia
CIGNAHealthcareofTexas
FallonHealthPlan
FirstChoiceHealthPlan
GEMedicalSystems
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GenzymeGenetics
GroupHealthCooperativeofPugetSound
HarborviewMedicalCenter
HarvardPilgrimHealthPlan
HealthcarePartnersLtd.
HealthIndustryManufacturersAssociation
Memorial-HermannHealthSystem
Hewlett-Packard
KaiserPermanente(nationalheadquarters)
KaiserPermanente(SouthernCalifornia)
MedicalAlleyAssociates
MedicalCareOmbudsmanProgram
Medtronic
MemorialSistersofCharity
MethodistCare
MethodistHealthCareSystem
PacifiCare(nationalheadquarters)
PacifiCareofCalifornia
PacifiCareofTexas
PartnersCommunityHealthCare
Pfizer,Inc.
PrescriptionSolutions
ProvidenceHealthPlans
PrudentialHealthPlan
RegenceBlueCrossBlueShieldofOregon
Smith/KlineBeechamPharmaceuticals
St.Luke'sEpiscopalHospital
SwedishMedicalCenter
TuftsHealthCarePlan
UCLAMedicalCenter
UnitedHealthCare(nationalheadquarters)
UnitedHealthCare(Chicago)
UniversityofChicagoHospital
VirginiaMasonMedicalCenter
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Executive Summary
Background
ThecontinuingupwardspiralofhealthcarespendingintheUnitedStateshas
concernedpolicymakersandanalystsforover25years. Avarietyofforceshavebeen
positedasdriversofthiscostgrowth,includingtheagingofthepopulation,risingpercapita
income,thespreadofinsurance,andtheincreasedsupplyofphysicians. Althoughdifficult
toquantify,manyanalystshaveidentifiedthedevelopmentandadoptionofnewtechnologies
asaprimarydrivingforce.Technologyisanespeciallypotentforcebecauseofitsinteractive
relationship with insurance. Expanded insurance coverage has increased health care
spending,whichencouragesresearchanddevelopment(R&D)ofnewtechnologies. New
technologiesdirectlyraiseaggregatehealthspendingbecause,historically,mosthavebeen
costincreasing. Theyalsoexertanindirecteffectbyincreasingdemandforinsuranceand
expandingthedefinitionofinsurancecoverage,whichintumincreasedemandforservices.
Ithasbeensuggestedthatmanagedcaremayalterthefeedbackloopbetweenhealth
insuranceandtechnologicalinnovation,therebybreakingthisinflationaryspiral. Managed
careorganizations(MCOs)maybelesslikelythantraditionalindemnityplanstocovernew
technologiesormaybebetterabletocontrolthediffusionofthosethatarecovered.
Managedcareplansareexpectedparticularlytocontroltheadoptionofcost-increasing
technologies. Astheimportanceofmanagedcaregrows,incentivesforR&Dinvestment
mayshiftawayfromtechnologiesthatincreasecostswithoutacommensurateimprovement
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ExecutiveSummary
inoutcomestothosethancandemonstratecost-effectivenessorevenreducecosts. The
growthinMedicaremanagedcareisparticularlysignificantgiventhesizeofthispopulation
anditshighlevelsofserviceuse. Thisstudywentinsidetheblackboxofdecision-making
onthedemandside(MCOs)andthesupplyside(manufacturers)ofthetechnologyequation,
usingcasestudyinterviewstounderstandthecomplexrelationshipbetweenmanagedcare
and technology adoption, diffusion, and development. Our definition oftechnology
encompassedprocedures,devices,andpharmaceuticals,includingbiotechnology.
StudyDesign
Onthedemandside,ourcasestudiesexamineddecision-makingbyMCOsregarding
thecoverageofspecifictechnologies,factorsinfluencingthosedecisions,mechanismsused
tocontrolutilizationofcoveredtechnologies,anddecision-makingaboutproductdesign,
includingbenefitpackages,premiums,andcostsharing. Weconductedinterviewswith1
MCOsinsixmarketareasacrossthecountrythatvariedinmanagedcarepenetration.
BecauseofourspecialinterestintheimpactofMedicaremanagedcare,alloftheinterview
siteswereMedicare+Choicecontractors(or,inonecase,expectedtolaunchaMedicare
productshortly). Wealsoconductedinterviewsatselectedhospitalsandlargephysician
groupsthatbearsubstantiallevelsofriskbecausemanyimportanttechnologyadoption
decisionsarenotwithinthedirectpurviewofMCOs. However,theinfluenceofmanaged
caremaybeobservedindirectlyviaitsimpactondecisions,madebyproviders. Wealso
spokewithstafffi-omthenationalheadquartersoffiveMCOs. Additionalinterviewswere
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ExecutiveSummary
conducted with three types oforganizations that have a collateral role in coverage
decision-making—technology assessment organizations, pharmacy benefits managers
(PBMs),andexternalrevieworganizations.
OursupplysidecasestudiesexploredR&Dinvestmentdecisionmakinginthedevice
andpharmaceuticalindustries. Oursitesincludedfourdevicemanufacturersandthree
pharmaceutical companies, one ofwhich was a biotechnology firm. We selected
manufacturersoftechnologieswithcharacteristicsthatvariedalongdimensionsthatwere
expected to impact the influence ofmanaged care, including: visibilityto patients;
cost-savingvs.cost-increasing;currentdiffusionlevel;inpatientvs.outpatientlocus;and
Medicareorientation. Ourinterviewsaddressedthefullrangeoffactorsexpectedtodrive
manufacturerR&Dagendas. Inadditiontomanagedcaregenerally,andMedicaremanaged
careinspecific,thesefactorsincludedscientificadvances,populationdemographics,world
markets,andproviderpaymentpolicies. Wealsodiscussedmanufacturermarketingand
forecastingstrategies.
Findings
MCOs. Withtheexceptionofafewsmall,immatureplans,eachoftheMCOs
interviewedhadaformalprocessformakingtechnologycoveragedecisions. Planstypically
onlysetpolicyforasmallpercentageofthenewtechnologiesthatcomeonthemarket
becausetheassessmentprocessisverycostly. Assessmentsareusuallytargetedathighcost
orcontroversialtechnologies,althoughmorecoveragedecisionsaremadeforindividual
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ExecutiveSummary
drugsthroughtheprocessofsettingtheformulary. MCOsstresstheclinicalorientationof
their technology assessment process and assert that cost is very rarely an explicit
consideration. Priceismoreoftenafactorinsettingdrugformulariesduetotheavailability
ofcloseorexactsubstitutes. Allplansindicatedthattheywouldnotreftisetocovera
technologythathadbeen generallyacceptedasthe standard ofcare, no matterhow
expensive.MCOsrarelyincorporatecost-effectivenessanalysesintheircoveragedecisions;
instead,theyfocusonthesafetyandefficacyofthetechnologyandimprovementover
existingtechnologies.
Withtheexceptionoftechnologiesconsideredtobedangerous, ineffective,or
unproven(i.e.,investigational/experimental),MCOsrarelyadoptablanketno-coverage
policy foratechnology and, instead, establish medical necessity criteria for its use.
However,theseguidelinesareoftenbasedoncomplexdiagnosticindicationsandtreatment
historythatcannotbeincorporatedinautomatedclaimsprocessingsystems. Whileplansuse
prior authorization or utilization review for some technologies, these types ofaudit
mechanismsarelaborintensiveandtooexpensivetouseroutinely. Asaresultitmaybe
difficulttocontrol"off-label"useoftechnologiesthathavebeenapprovedforlimited
indications. Plansfacepowerfulexternalpressures—frompatients,purchasers,politicians,
andthemedia-thatmake itdifficultforthemto denycoverage ofservices. Recent
discussionsofPatients'BillofRightslegislationinmanystateshavecrystallizedthese
pressures.
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