Creative control measures needed by MCOs

July 1, 2006

CAMBRIDGE, MASS.-The growth rate in medical costs for MCOs in 2006 will decrease marginally compared with 2005 as a result of continued efforts to control costs, according to a MedPanel Inc. survey of managed care medical directors representing about 30 million U.S. lives.

CAMBRIDGE, MASS.-The growth rate in medical costs for MCOs in 2006 will decrease marginally compared with 2005 as a result of continued efforts to control costs, according to a MedPanel Inc. survey of managed care medical directors representing about 30 million U.S. lives.

"While managed care executives anticipated a rise in overall costs between 2005 and 2006, the rate of increase was expected to be slightly lower than the increase seen from 2004 to 2005," says Stephen Bubb, senior director, quantitative services at MedPanel, a global online research firm. Managed care medical directors in MedPanel's 2006 and 2004 surveys predicted medical cost growth rates of 10.4% and 10.9%, respectively.

In the 2006 survey, the majority of medical directors (68%) indicated that managing specialty pharmacy costs is a high priority. Further, MCOs are expected to adopt health-plan designs that shift decision-making to consumers.

In the current environment, MCOs have no choice but to continue aggressive attempts to control pharmacy costs and minimize hospital utilization rates, according to Matt Fearer, senior vice president, MedPanel. "Strategic investment in persistency and compliance programs and prevention initiatives will remain critically important, particularly for suppressing rates of hospitalization. Increased cost-sharing for patients appears inevitable," Fearer says. "As MCOs introduce consumer-driven products, we encourage them to focus on educational programs that help consumers to make informed healthcare purchasing decisions."