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Clinical care contributes only 20 percent to overall health outcomes, according to a population health model developed at the University of Wisconsin. Factors contributing to the remainder include lifestyle behaviors, the physical environment, and social and economic forces--all generally considered outside the realm of care. In 2010 Minnesota-based HealthPartners decided to target nonclinical community health factors as a formal part of its strategic business plan to improve public health in the Twin Cities area. The strategy included creating partnerships with businesses and institutions that are generally unaccustomed to working together or considering how their actions could help improve community health. This article describes efforts to promote healthy eating in schools, reduce the stigma of mental illness, improve end-of-life decision making, and strengthen an inner-city neighborhood. Although still in their early stages, the partnerships can serve as encouragement for organizations inside and outside health care that are considering undertaking similar efforts in their markets.

Variation in the use of hospital and physician services among Medicare beneficiaries is well documented. However, less is known about the younger, commercially insured population. Using data from the Community Tracking Study to investigate this issue, we found significant variation in the use of both inpatient and outpatient services across twelve metropolitan areas. HMO insurance reduces, but does not eliminate, the extent of this variation. Our results suggest that health plan spending to better organize delivery systems and manage care may be efficient, and regulations that arbitrarily cap plans' spending on administration, such as minimum medical loss ratios, could undermine efforts to achieve better value in health care.

For the past decade, the high-quality, relatively low-cost health care delivered in Grand Junction, Colorado, has led that community to outperform most others in the United States. Medicare patients in Grand Junction have fewer hospitalizations, shorter hospitalizations, and lower mortality rates after hospitalization than do Medicare patients in comparison hospitals. Effective, efficient care is delivered in Grand Junction through separate, self-governing organizations that perceive health care as a community resource. This article describes how the various stakeholders in Grand Junction have addressed problems and set standards for the system. The lessons could apply to broader health reform efforts in communities around the country.

As the patient-centered medical home model emerges as a key vehicle to improve the quality of health care and to control costs, the experience of Seattle-based Group Health Cooperative with its medical home pilot takes on added importance. This paper examines the effects of the medical home prototype on patients' experiences, quality, burnout of clinicians, and total costs at twenty-one to twenty-four months after implementation. The results show improvements in patients' experiences, quality, and clinician burnout through two years. Compared to other Group Health clinics, patients in the medical home experienced 29 percent fewer emergency visits and 6 percent fewer hospitalizations. We estimate total savings of $10.3 per patient per month twenty-one months into the pilot. We offer an operational blueprint and policy recommendations for adoption in other health care settings.

Two decades into the age of high-cost biotechnology medications, health care organizations are challenged to provide safe, effective treatment while managing costs. In a market lacking generic biotech drugs, health care organizations have few opportunities to negotiate reduced pricing; other strategies must be devised to manage use. Kaiser Permanente leverages its integrated health care delivery system to deploy management tools for costly therapies: evidence analysis, usage measurements, and multidisciplinary planning. Evidence-based medicine and realization of value provided by new therapies will depend on data capture and outcomes measurement, tools that are crucial to Kaiser Permanente's management of biotechnologies and effective use of members' financial resources.

Concerns among patients and physicians that health plans would deny coverage for medically necessary services has brought about legislation mandating independent medical review (IMR) of denied services. Among 1,400 cases submitted in California, the most common areas for dispute were cancer care, endocrine/metabolic care (especially for obesity), orthopedic care, and neurological disorders. Surgery and pharmacy services constituted 52 percent of cases. In 58 percent of cases, IMR upheld the health plan's decision, while in 33 percent of cases the health plan's decision was overturned, which suggests that external IMR provides additional patient protection in California's health care system.

Data from a survey of practicing physicians in California's thirteen largest urban counties were used to ascertain differences in care management processes, financial incentives for quality, and practice pressures by type of practice setting. Physicians in the Permanente medical groups have adopted and value quality-oriented, system-level care management tools to a much greater degree than physicians in independent practice association (IPA) networks or traditional "cottage-industry" practices. Our findings raise disturbing questions about how the health system will close the "quality chasm" in medical care without transforming the underlying organization of physician practices.

Disease management (DM) promises to achieve cost savings by improving the quality of care for chronic diseases. During the past decade the Permanente Medical Group in Northern California has implemented extensive DM programs. Examining quality indicators, utilization, and costs for 1996-2002 for adults with four conditions, we find evidence of substantial quality improvement but not cost savings. The causal pathway--from improved care to reduced morbidity to cost savings--has not produced sufficient savings to offset the rising costs of improved care. We conclude that the rationale for DM programs, like the rationale for any medical treatments, should rest on their effectiveness and value.

Rising pharmacy costs and demand for prescription drug coverage for broader populations of seniors have resulted in the implementation of generic-only pharmacy benefits in Medicare health maintenance organizations (HMOs). The impact on cost and quality of care is unknown. We examined data for members of a California Medicare HMO whose coverage changed to a generic-only benefit and found that the change was associated with reduced health plan pharmacy cost, increased out-of-pocket pharmacy costs for members, increased overall hospital admissions, changed drug-use patterns, and a negative impact on quality metrics for certain conditions. These findings have important implications for future research and health policy decisions.

Managed care plans have been encouraged to address the health of the communities in which they are located. This paper presents the first nationally representative portrait of health maintenance organizations' (HMOs') community benefit activities, based on survey data from 1999. We found that HMOs were engaged in a wider variety of community involvements than were identified in past legal decisions and legislation defining "community benefits" for health plans. The scope of community activities was broader for HMOs that enroll Medicaid recipients, are influenced by local business leaders, operate under nonprofit ownership, and are located in states with community benefit reporting laws.

Health maintenance organizations' (HMOs') restrictions on the size of their physician networks may facilitate cost containment and quality improvement activities but may also impede access to care and impose barriers to those wishing to switch health plans or jobs. We examine the extent, variation, and predictors of overlap in HMO physician networks. We predict that people who switch HMOs have a reasonable likelihood (50 percent) of being able to retain their physician. Overlap ranges from an upper quartile of 69 percent to a lower quartile of 34 percent. Group/staff-model HMOs have little overlap, while younger plans, for-profit plans, and plans in small markets have greater overlap.

States rely on health maintenance organizations (HMOs) for their Medicaid beneficiaries because they offer guaranteed access to comprehensive benefits at a predictable cost. This is true despite movement away from HMOs, or at least the more restrictive variants, in the private sector. Plans that focus on Medicaid are becoming more central to states' programs as commercial plans exit. Publicly traded, Medicaid-focused plans are also emerging. Medicaid participating plans are aggressively managing costs and care, contrasting sharply with commercial insurance where the trend is toward less intrusive managed care. In this context, state Medicaid managed care programs are facing important policy challenges related to plan participation, mainstreaming, and product design.

This paper describes staffing at eight large prepaid group practices (PGPs) serving more than eight million enrollees at Kaiser Permanente and two other health maintenance organizations (HMOs). Even after characteristics of the patient populations and outside referrals are accounted for, these PGPs have a physician-to-population ratio that is 22-37 percent below the national rate. Two decades of historical data at Kaiser Permanente indicate that its rate of specialist growth was far higher than that of primary care. The study suggests that efficient systems of care can readily meet the demands of patient populations with workforce staffing ratios below current U.S. levels.

Although interest in expanding SCHIP coverage to parents has grown over the past five years, few such expansions have actually been implemented. State governments and health plan administrators remain concerned that these expansions will attract only high-risk enrollees, resulting in costly premiums that require large subsidies. We examine characteristics of enrollees in an SCHIP-like expansion program in Alameda County, California. According to our survey data, the program did not experience unfavorable selection. Rather, it attracted a broad range of eligible adults. Enrollees were comparable to the overall low-income population in Alameda County in terms of age, health status, and various utilization measures.

IPA-model HMOs are now the dominant organizational structures for delivering "managed care" in the United States. Are they taking advantage of opportunities to support physician practices in ways that arguably could improve care? In this paper we report the findings from a survey of generalist and specialist physicians in nineteen health plans. Not surprisingly, we found that generalists are much more likely than specialists are to be the target of health plans' efforts to support care delivery. However, our survey data indicate that these opportunities generally are not being fully exploited; also, efforts that plans do make to provide information to support care often are not seen as useful by physicians.

This paper synthesizes results from peer-reviewed literature published from 1997 to mid-2001, on various dimensions of health maintenance organization (HMO) plan performance. Results from seventy-nine studies suggest that both types of plans provide roughly comparable quality of care, while HMOs lower use of hospital and other expensive resources somewhat. At the same time, HMO enrollees report worse results on many measures of access to care and lower levels of satisfaction, compared with non-HMO enrollees. Quality-of-care results in particular are heterogeneous, which suggests that quality is not uniform--that it varies widely among providers, plans (HMO and non-HMO), and geographic areas.

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.

Despite speculation about the nature of disputes between managed care enrollees and their health plans over benefit denials, little empirical information exists about the details of such disputes and how they are actually handled. In this study we profile more than 11,000 appeals lodged between 1998 and 2000 by enrollees at two of the nation's largest health maintenance organizations (HMOs), to shed some preliminary light on the vast terrain of enrollee appeals. As many as half of appeals involved requests for reimbursement for costs of services already obtained ("retrospective" appeals), as opposed to services sought ("prospective appeals"). Enrollees won 36 percent of prospective appeals at Plan 1 and 70 percent at Plan 2, compared with 89 percent and 78 percent, respectively, of retrospective appeals. The success rate among retrospective appeals involving emergency room services--95 percent at both plans--was particularly striking.

Are health maintenance organizations (HMOs) less profitable in more competitive markets, and does competition erode unusually high profits over time? To answer these questions, we examined profit rates (as a proportion of revenues) in 1994 and 1997 for all HMOs in 259 metropolitan areas. We found that profits were significantly lower on average in 1994 in markets with more competition, measured alternatively by the number of HMOs or their market concentration. We also found that there was no relationship between a market's relative profit ranking in 1994 and its ranking in 1997; highly profitable markets were not able to preserve their relative standing. Neither the proportion of HMO enrollees in for-profit HMOs nor HMO market penetration was significantly related to profit rates.

Health care organizations may compete by developing organized processes to improve quality and increase efficiency, or may focus on growing to increase negotiating leverage and on controlling costs through withholding appropriate care and avoiding sick patients. This paper describes key ways in which public and private policy decisions create incentives that influence the competitive focus of physician groups in California, a state in which physician groups and health maintenance organizations are prevalent. These policies do not manage competition in optimal ways: They reward groups for market leverage and controlling costs while failing to fully reward quality and efficiency.

Many of the 250 physician organizations that provide care to California's sixteen million health maintenance organization enrollees are in a state of crisis, squeezed between constrained revenues, rising practice costs, and consumer sentiment that favors unconstrained choice over integrated delivery. Medical groups and independent practice associations are retrenching to their core geographic areas, reducing capitation for drug benefits and hospital services, and abandoning dreams of displacing health plans. Consolidation is accelerating in some areas, as medical groups join with hospitals to extract higher payment rates from insurers and employers. The conjunction of consumerism and premium inflation creates new opportunities for organizations that truly can manage health care, but the challenges roiling California's medical groups may preclude meaningful efforts to seize the initiative.

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.

An estimated five million Medicare beneficiaries received outpatient prescription drug benefits through Medicare + Choice in 1999. However, little is known about how these benefits are managed or about their effects on costs and quality of care. This exploratory study applies a case-study methodology to four large Medicare health maintenance organizations (HMOs) to identify and assess drug-use management strategies. It also poses a number of important issues for consideration by both policymakers and health services researchers, as the debate rages on over the creation and administration of a Medicare outpatient drug benefit, especially in light of the predilection for the use of private pharmacy benefit managers (PBMs) in many of these proposals.

Drug companies argue that newer, more expensive drugs offset other medical costs; health plans counter that they increase pharmacy costs more than they offer a "pharmacoeconomic" benefit. Neither side is universally right or wrong, and neither has the data to support its case. Increasing drug costs for selective therapeutic classes represent the fulfillment of managed care's original promise. Certain therapeutic classes of drugs offer pharmacoeconomic benefit, while others represent induced costs in excess of this benefit. Health maintenance organizations (HMOs) should determine one from the other and incorporate these findings into their plan designs; multitier drug coverage is the best method to achieve this.

More than 400,000 Medicare beneficiaries had to seek other insurance arrangements when their health maintenance organization (HMO) withdrew from Medicare at the end of 1998. According to a new survey of 1,830 involuntarily disenrolled Medicare beneficiaries, two-thirds subsequently enrolled in another Medicare HMO; one-third experienced a decline in benefits, and 39 percent reported higher monthly premiums. One in seven lost prescription drug coverage; about one in five had to switch to a new primary care doctor or specialist. Those with traditional Medicare by itself or with Medigap, the disabled under age sixty-five, the oldest old, and the near-poor experienced the greatest hardship after their HMO withdrew.

The same forces that encouraged the expansion of managed care also brought about change in health maintenance organizations (HMOs). Using data from annual surveys of the Association of American Health Plans and other sources, this paper examines ten major changes in the HMO industry during the 1990s, including the growth of for-profit plans and the relative decline of nonprofits; the shift from vertically integrated group/staff models to virtually integrated individual practice associations/network models; industry consolidation through mergers and acquisitions; increased patient cost sharing; and the shift to capitation payment of primary care physicians. Current research is unable to show whether these changes have led to improved quality of care or patient satisfaction.

Because for-profit conversions of nonprofit organizations are regulated under trust law at the state level, their health policy implications have generally not been part of the process. This paper provides a health policy framework for assessing conversions of hospitals and health maintenance organizations (HMOs). It begins with basic differences in ownership forms and identifies considerations on both sides of the conversion question. The analysis turns on the extent of the social benefits of nonprofits: the regulatory tool provided by tax exemptions, trustworthiness in the presence of informational asymmetries, and community benefit activities. The analysis and the evidence suggest that the nonprofit form continues to hold significant advantages in health care that bear consideration by policymakers faced with conversion proposals.