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If managed care executives can't get accurate information and honest opinions, they can't make the right decisions, according to Allan Baumgarten, author of annual state managed care reviews and an independent research consultant in policy, finance and local market strategies.
Baumgarten says that health plans, provider organizations, government agencies and pharmaceutical manufacturers value objectivity, even if the findings make them uncomfortable at times. He says his research is cited by state regulators in cases of mergers and acquisitions and by state legislators that are looking at proposals to expand Medicaid managed care.
"State HMO associations may disagree with me, but I think they understand that there's some value to them having an outside analyst presenting an objective view of what's going on in their industry," Baumgarten says.
Q. Why focus on HMOs if the majority of commercial members are in non-HMO plans such as PPOs and CDHPs?
A. Expanding the market analysis template to keep up with recent developments is the biggest challenge I face as a researcher. Since starting these reports in 1990, the focus has been on HMOs and hospital systems. One reason is because the best data to analyze enrollment, market share and finances-and more recently measures of utilization and effectiveness-has always been in the HMOs. Sometimes I feel like the little boy who lost a dollar and looks for it under the street lamp-he lost it somewhere else but the light is better by the lamp. There is no comparable, consistently reported data on enrollment in and financial results for PPOs and consumer-directed plans, particularly once the employers move into self-funded arrangements.
Even with the departure of many employer groups from HMOs, those plans still provide a benchmark for comparing premium rates and benefit design. And, while there are no guarantees, Medicare and Medicaid HMOs are enjoying steady growth and are important segments of the overall market.
A related challenge for my analysis template is how can I develop useful information about physicians and their practices? It's one thing to look at the large, integrated physician organizations in California, but it's much different in a state like Arizona, where 70% or more of physicians are in practices of five or fewer doctors.
Q. How do premium costs and trends compare across states?
A. Premium trends have moderated a little in recent years, but employers have had to absorb double-digit increases for most of the past seven years, well above inflation in the general economy and often more than the growth of their revenues. Employers in California enjoyed relatively low premiums for much of the 1990s, but premium rates there have since caught up with other states. Steadily increasing premiums have made health plans profitable, and providers, at least the hospitals and specialists, are sharing in the new revenue. It's obviously bad news for employers who have seen their monthly premiums increase by $100 or more, per-member, per-month, in the past five years.