Global Statistics

Global Statistics


Your Guide to Managed Care

Everything you need to know about managed care, from the ABCs of HMOs to local plan comparisons, so you can choose the health care coverage that suits you best.

More and more, the United States is moving in the direction of managed care. 54 million Americans –that’s 30 percent of all the insured population — receive their medical care from about 600 HMOs. About 76 million Americans belong to preferred provider organizations (PPOs). That means that seven out of every ten insured Americans is covered under a managed health care plan.

Therefore, whether you are already in a managed care plan or not, it is important that you understand what managed care is and how it provides health care. It is also important to be able to distinguish between all the different managed care plans now available. To help you in this effort, Health Pages has collected Report Cards on managed care plans from around the country.

The fervor over health care reform has died down in Washington and, with no legislative directive, market forces are leading the country’s efforts to curb health care costs. So, where is the market leading us? More and more, the country is moving in the direction of managed care.

In fact, 81 percent of all employers now offer managed care to their employees. The reason for the shift from traditional fee-for-service to managed care is simple. As the cost of health care continues to rise — last year alone the cost jumped nearly three and one-half percent ($40,000,000,000!) — managed care plans offer employers and employees a significant cost advantage with savings of 10 percent or more.

Is managed care the cure-all for our ailing health care system? The jury is still out, but the following is an explanation of what managed care is intended to do.

What Is Managed Care?

Traditionally health care has been provided by independent doctors and hospitals. Managed care refers to a health care delivery system that contractually links doctors, hospitals and insurance plans. Under managed care, the consumer becomes part of an organized provider system designed to be responsible for his or her total health, to emphasize disease prevention and health education, and to actively oversee the quality of care provided.

Managed care is not a new concept. In fact, the earliest HMO originated in 1929 at the request of the Los Angeles Department of Water and Power. Later, in 1969, the National Governors’ Association supported a proposal for national health insurance to contain massive health care inflation. The Nixon administration, searching for an alternative that minimized the role of government, saw Health Maintenance Organizations as a way to reverse the illogical financial incentives that paid physicians and hospitals for illness rather than health. Nixon’s 1971 HMO legislation provided planning and startup funds. It envisioned 1700 HMOs in operation by 1976, enrolling 40 million people. Although HMOs served only 9 million people by 1980, they served 36 million by 1990.

The Growth of Managed Care

 Source: Bernstein Research, 1995

How Does Managed Care Propose to Save Money?

Some managed care plans negotiate fees with doctors, hospitals and other health care providers. Most doctors, for example, give plans approximately a 20 percent discount off their usual fees. The incentive for the physicians and hospitals is a guaranteed patient pool. The plans then offer patients strong financial incentives– lower out-of-pocket costs — to encourage them to use the health care providers who are part of the network.

Other plans affiliate with a group of doctors to deliver services and use financial arrangements and incentives, such as bonuses, to deliver efficient care.

In order to participate in the plan, health care professionals must provide information about themselves and their services. While decisions about appropriate care are left to individual physicians, they work with health plans to coordinate patient care. This helps the plan deliver appropriate care — neither too much nor too little — something traditional indemnity, or fee-for-service plans never claimed to do. Under those plans, claims are paid with very little investigation into what service has been provided or why.

Many managed care plans, on the other hand, have formal systems set up to improve and review the quality of care provided. These systems are designed to eliminate the unnecessary, wasteful care and duplicate tests that some experts say account for 30 percent of America’s health care costs. Managed care plans also put a high emphasis on preventive-care and early detection to benefit patients and keep costs down. But critics — including both doctors and patients — believe the pressure on health care providers to keep down costs may lead to delays in or denial of necessary care.

What is the Role of a Primary Care Physician?

As part of their strategy to increase quality of care and control costs, many managed care plans require patients to see a primary care physician (family practitioner, internist or pediatrician) before consulting a specialist. The modern day equivalent of the traditional family doctor, he or she is charged with knowing a patient’s complete medical history, making the initial diagnosis and advising on further treatment.

For example, if someone complains of stomach pains, the primary care physician evaluates the patient first and rules out basic problems before sending the patient to a specialist. Under a traditional plan, a patient might have more or less diagnosed him or herself, gone directly to a gastroenterologist, and been reimbursed for the visit by the insurance company without question.

The managed care system is meant to coordinate care, deliver quality of care efficiently and cut down on unnecessary and expensive visits to specialists that may include needless tests and hospitalizations. But opponents of managed care argue that this approach is intrusive to the established relationship many patients have with specialists they know and trust.

Does the system work? According to a 12-year study by RAND — an independent research organization in Santa Monica, California — patients who belonged to HMOs experienced up to 40 percent fewer hospitalizations and saved up to 28 percent on health care costs compared to patients covered by traditional insurance plans. And there was no adverse effect on the quality of care the HMO members received. Additional studies have found that diagnosis and treatment results as well as mortality rates for HMO patients with serious diseases were equal to those for private patients. And while the rate of discretionary, or elective, surgery was lower for HMO patients, the rate of non-discretionary surgery (such as hernia repair) was the same for both.

Most managed care plans achieve these lower hospitalization rates by working closely with participating physicians — reviewing their decisions before, during and after a patient’s hospitalization. Except in an emergency, physicians are often required to get approval from the plan before hospitalizing a patient. The plan checks with the physician during the hospitalization to make sure it is still warranted. Still, there is room for improvement: An analysis by RAND indicates that while the hysterectomy rate was uniform among HMOs, 16 percent of them were clearly unnecessary and an additional 25 percent were questionable.

Some plans periodically review all of a physician’s cases and notify him or her if too many patients seem to have been inappropriately referred to specialists. In those instances, there may be some type of financial penalty, or disincentive, to ordering unnecessary care. Other plans examine the quality and efficiency of their physicians, identify the best practices and offer incentives to help other provider groups adapt to their example.

Using financial incentives to control referrals has come under fire by critics who say physicians may become too cautious about sending a patient to a specialist if it might cost them money to do so. They also claim plans have a tendency to sever contracts with doctors who consistently cost them more money and who lobby too adamantly and frequently for services. Others, however, argue this is what the system needs in order to provide the appropriate level of care most efficiently. In the end, you as a health care consumer, have to be informed and ask questions if you feel you are getting too little or too much care.

Health Plans: Picking a Package

There are several types of managed care plans from which to choose. Plans tend to differ on choice, the role of the primary care doctor (such as if he or she will act as a gatekeeper), and the type of preventive medical care the plan will cover.

Health Maintenance Organizations (HMOS)

HMOs, in existence for more than 50 years and in federal law since the days of the Nixon administration, are the best known and earliest form of managed care.

Patients in Health Maintenance Organizations must choose their doctors, hospitals and other health care services from the plan’s provider list in order to be fully covered (many HMOs do not allow you to go outside the plan). Primary care physicians are responsible for monitoring and directing your care. Preventive care is covered from childhood through the senior years.

In addition to monthly premiums, members of HMOs pay a small fee — between $5 and $15 — each time they visit a doctor. It is the physician’s responsibility to file claims with the HMO.

But even among HMOs, there are differences. In general, there are five basic types of HMOs. Here is a basic description of each:

1. Staff Model. An HMO that hires its own doctors, who usually practice in the HMO’s facilities. Physicians get a ready-made practice, with relatively fixed hours and a predictable income.

2. Group Model. An HMO that contracts with one or more independent group practices of physicians to provide services to its enrollees often on an exclusive basis, meaning the group can only treat that plan’s members.

3. Network Model. Similar to a group model, this type of HMO contracts with one or more independent group practices of physicians to provide services to its enrollees. The difference is that it does so on a non-exclusive basis. Such an arrangement allows the physicians to treat patients who are not members of the plan.

4. Independent Practice Association (IPA). This type of HMO (sometimes called an “HMO without walls”) contracts with individual physicians to care for plan members in their own private offices. Physicians are free to contract with more than one plan and usually deliver care on a fee-for-service basis as well.

5. Point Of Service Plan (POS). Sometimes called “open HMOs,” these increasingly popular plans are similar to IPAs. POS members have the option to go to doctors who are not part of the plan’s network. But there is a disincentive to go outside the provider list — a significant financial penalty that includes deductibles, co-payments and lower reimbursement schedules. A woman seeing an in-network primary care physician will incur a charge of only $10 per visit, but if she goes outside the network for her care, she may have to foot up to 30 percent of the bill, and her deductible could run as high as $500 to $1,000. There are so many POS plans in the area that we have differentiated them from HMOs in the report card data.

Preferred Provider Organizations (PPOs)

PPOs are growing in number and are a compromise between traditional indemnity and HMOs. Like HMOs, these networks of physicians and hospitals have agreed to discount their rates for plan members. But, unlike HMOs, many PPOs do not use the primary care physician to oversee a patient’s overall care. Consequently, members can consult a specialist whenever they feel it necessary. However, they are strongly encouraged to see physicians who are part of the network. If they don’t, they are reimbursed less — anywhere from 80 to 100 percent reimbursement for treatment by PPO providers versus 60 to 70 percent for treatment by physicians outside the network.

How Managed Care Plans Choose Providers

Clearly, a managed care plan is only as good as the network of physicians and hospitals it has to deliver health care to its members. How carefully these providers have been chosen, and which providers choose to join, can determine the kind of care members will receive.

Physicians. The process by which plans choose doctors to join their network, called credentialing, has varied greatly. Some plans simply require that a physician be state licensed and have admitting privileges at a hospital. Others only recruit physicians who have admitting privileges at specific hospitals or who are board certified. However, as external oversight of managed care grows, methods are becoming more comparable.

Some plans invite all physicians in a given area to join the network. Although this offers members more choice, a large number of physicians may make it harder for the plan to monitor a patient’s use of medical services and the quality of care he or she receives. On the other hand, if a plan has only a small number of physicians, it could mean either that the plan is very selective or that doctors refused to join or dropped out. It may also be that the plan doesn’t have enough members to warrant a larger network. Ask the plan about how they choose and rate their physicians.

Hospitals. When it comes to picking which hospitals to include in their network, managed care plans often base their decisions primarily on geography. If there is more than one hospital in a given area, hospital reputation, physician preference and the sorts of discounts the hospital offers will help determine which hospitals to include. In addition, there is a growing amount of information about a hospitals’ outcomes, the results of treatment like the rate of death and complications, which plans can use as well.

Quality Check

The most important test of the quality of care provided by a plan is whether patients get well and stay that way. Most managed care plans keep an eye on their members’ use of services, such as the number of office visits, lab tests and the length of hospital stays. But the best plans also examine the effect care has on patients. For example, they may identify which tests and procedures work best and which are wasteful or risky. However, it is important to allow variation from those standards based on a patient’s individual history and needs.

In traditional fee-for-service medicine, a doctor’s poor performance may only be known to the patient, since the insurance plans don’t track patient care. Under managed care a physician is partly accountable to the plan administrators, which makes it easier to track a pattern of questionable physician performance over time.

A good plan will make public. Some plans also conduct performance information periodic patient surveys. Ask to see a copy of the most recent survey before joining.

Who’s Minding the Managed Care Plan?

  • The National Committee for Quality Assurance (NCQA), an independent nonprofit organization located in Washington, DC, accredits managed care plans — mostly HMOs — based on a stringent set of quality criteria. Since its inception in 1991, NCQA has reviewed 247 plans nationwide. Reviews are scheduled for 86 others. NCQA grants three levels of accreditation: Full Accreditation, indicates the plan has excellent quality improvement programs, meets rigorous standards and is accredited for three years; One Year Accreditation, indicates the plan has well established quality improvement programs, meets most NCQA standards and will be reviewed again after a year to determine if they can be moved up to full accreditation; and Provisional Accreditation, granted to plans that have adequate quality improvement programs and meet some NCQA standards, but need to demonstrate progress before they can qualify for higher levels of accreditation. Plans who do not meet any of these standards are denied accreditation. 11 percent of all plans inspected by NCQA are denied accreditation.
  • The Utilization Review Accreditation Commission (URAC) looks at how a plan determines whether a medical procedure is necessary. URAC has accredited 141 companies nationwide.
  • Every managed care plan is required to have a grievance process clearly delineated and to make it known to its members how to use it. This process allows a patient to appeal the plan’s decision on whether or not medical care is needed or on the amount of reimbursement you are entitled to. The agency that regulates this process and takes complaints of enrollees disatisfied with the process, vary by state.
  • In many states both the Department of Health and the Department of Insurance jointly oversee HMOs in the state. The Insurance Department oversees the business and financial aspects of HMOs and investigates consumer complaints that deal with contract issues. The Department of Health oversees the quality of care delivered to residents, conducts on-site surveys and investigates consumer complaints dealing with the quality of health care. Our listing of State Quality Controls will tell you who’s minding the managed care plan in your area.

Managed Care Plans vs. Traditional Health Insurance

What Are the Differences In…

…How You Choose a Physician?

Traditionally, you can go to see any physician you want, whenever you feel it is necessary.

Under managed care you are given a strong financial incentive to see only those physicians who have affiliated with the plan. In this local area, the average physician responding to Health Pages’ surveys participates in about 6 managed care plans.

…How You Consult a Specialist?

Traditionally, you can see any specialist whenever you like, though some specialists prefer a referral from your general practitioner.

Under managed care your primary care physician usually determines whether a specialist is needed and will refer you to one. If you are not referred to a specialist, and are not satisfied with that decision, some plans allow you to go out-of-network but you will have to pay a higher percentage of the specialist’s bill.

…The Scope of Periodic Checkups?

Traditionally, the periodic check-up does not include cancer screening tests like mammograms. Nationwide, only one-third of traditional plans cover the cost of a check-up.

Under managed care the periodic check-up by a primary care physician is paid for by the plan, and may be accompanied by reminders to get regular preventive screening tests, which are also covered.

…The Average Doctor’s Appointment?

Traditionally, you won’t have to wait long to get a non-emergency appointment, but you can expect to spend some time in the waiting room.

Under managed care, according to a Consumer Reports survey, members of HMOs have to wait a little longer to get a non-emergency appointment, but their wait is shorter once at the doctor’s office.

…Method of Payment?

Traditionally, after paying the yearly deductible (usually the first $200-$500), you will probably be asked to pay the physician’s bill up front. Later, you would submit a claim to be reimbursed for a certain percentage of the amount (usually 80 percent).

Under managed care you will be charged a $5, $10 or $15 co-payment. It is the doctor’s responsibility to file the necessary paperwork with the managed care plan.

…The Quality and Qualification of Physicians?

Traditionally, qualifications will vary from doctor to doctor. You alone are responsible for checking a physician’s qualifications and credentials and, having chosen one, making sure you are getting appropriate care.

Under managed care the plan takes on some of the responsibility of determining whether a doctor is qualified when it invites him or her to join the network. Nationally, about 75 percent of the physicians participating in managed care plans are board certified.

…Monitoring Members’ Satisfaction?

Traditionally, how satisfied you are with the care you receive is between you and your physician. The plan’s responsibility is limited to payment of claims.

Under managed care the plans will actively solicit your opinions on the quality of care you have received by means of periodic customer-satisfaction surveys.

Health Plan Options Compared

Type Of PlanWhat It OffersMethods Of Cost ControlAdvantages To PatientsDisadvantages To PatientsAnnual Premiums (Employee)*
Traditional IndemnityServices from any doctor or hospitalNone except screening for fraudulent claimsChoice of any doctor or hospitalClaim forms to file; preventive services not covered$3,650
Indemnity with Utilization ReviewServices from any doctor or hospitalPrior approval required for hospitalization and certain outpatient proceduresChoice of any doctor and access to any hospital after prior approvalAdditional paperwork to get approval for some services; preventive services not coveredN/A
Preferred Provider (PPO)Services from any doctor or hospital, but at lower cost to those using network providersDiscounts negotiated with doctors and hospitals; prior approval required for hospitalization and some outpatient proceduresHigher rate of reimbursement when using doctors and hospitals in the networkHigher cost for services outside network; additional paperwork to get approval of some services; preventive services are not always covered$3,169
HMO – Point of Service (POS)Services from any doctor or hospital, but at lower cost to those using network providersWithin network, family doctors manage utilization of services; hospital and physician fees are discountedWithin network, lower co-payments; preventive care covered; no claim formsHigher cost for services outside network; additional paperwork to get approval of some services$3,415
HMO – Independent Doctors (IPA)Services from any hospital or independent doctor affiliated with HMOFamily doctors manage services; hospital and physician fees are discountedLow co-payments; preventive care covered; no claim formsMust use approved doctors and hospitals$3,255**
HMO – Staff/Group ModelServices from hospitals under contract with HMO or salaried doctors at the HMO’s own medical centersFamily doctors at HMO medical centers manage services; hospital fees are discountedLow co-payments; preventive care covered; no claim formsMust use the HMO’s medical center doctors and hospitals$3,255**

N/A = Not Available

*1995 Survey of employer-sponsored health plans, Foster Higgins, Princeton, NJ

**Study did not distinguish between IPA and staff/group HMOs. Traditional indemnity plans are 12% more expensive than HMO plans.

How Plans Rate Physicians

Some managed care plans don’t just emphasize patient satisfaction and higher quality care, they actually reward it. The higher a physician scores on patient satisfaction surveys and on the plan’s reviews of patients’ medical charts the more he or she is likely to be paid by the plan. These bonuses serve as incentives to boost quality of care. Here are some of the questions plans ask to determine whether a physician is meeting the plan’s goals:

Patient Surveys

  • How easy is it to get an appointment for a checkup?
  • What’s the average waiting time in a doctor’s office?
  • How much personal concern does a doctor show for patients?
  • How readily were patients able to obtain their follow-up test results?
  • Would patients recommend their doctor to others?
  • What percentage of a doctor’s patients transfer to another physician’s care each year?

Chart Reviews

  • Do doctors provide regular immunizations for children? Breast cancer checks for women? Colon cancer checks for men?
  • Have periodic screening guidelines been met?
  • Were laboratory/radiology results reviewed and interpreted?
  • Is the working diagnosis consistent with the complaint and is the treatment plan appropriate?
  • Have consultations been used appropriately?

Healthspeak: The Language Of Managed Care

Co-insurance: The portion of covered health care expenses that must be met by the policyholder, in addition to the deductible. This figure is usually expressed as a percentage. For example, in a traditional 80/20 plan, the insurer pays 80 percent of the doctor’s bill and the patient pays 20 percent. This is based on the insurance company’s definition of what constitutes a physician’s “reasonable and customary” fee. NOTE: Many physicians’ charges are higher than the “reasonable and customary” fee and the patient is responsible for 100 percent of the excess amount. This is known as “balance billing.”

Co-payment: The amount a plan member has to pay – usually $5 to $15 – every time he or she visits an affiliated physician or receives services.

Credentialing: Managed care plan’s review of a physician’s background and current professional standing before contracting with him or her. This will usually require evidence of graduation from an accredited medical school, a current state medical license, hospital privileges in good standing, and a professional liability claims history, including chemical dependency, felony convictions and disciplinary actions.

Deductible: The amount a person must pay before the insurance company begins to pay its portion of claims. The higher the deductible, the lower the premium of the health plan.

Health Maintenance Organization (HMO): An HMO provides members, through a network of selected physicians and hospitals, a defined set of comprehensive benefits in exchange for a prepaid premium. There are generally no deductibles, small co-payments, and no claims to file. The HMO provides no reimbursement (or a reduced amount) for non-emergency care with a physician or hospital outside of the network. There are several types of HMOs:

Group Model: An HMO that contracts with a group practice of physicians to provide services to enrollees. These contracts can be either exclusive (the group can only treat plan members), or non-exclusive (the practices are free to contract with other plans and see fee-for-service patients). The latter are often referred to as Network models.

Staff Model: A type of HMO that hires its own doctors. These physicians usually practice under one roof and are salaried by the plan.

Independent Practice Association (IPA): An “HMO without walls,” in which patients choose

doctors from a select list and are treated at the physicians’ private offices. IPA physicians are free to contract with more than one HMO at a time, as well as see fee-for-service patients.

Point of Service Plan (POS): The latest development in managed care, this type of HMO allows the patient to see either an in-network or out-of-network provider. But the patient pays more for opting out of the system. In those instances, reimbursement is only 50 to 80 percent, the patient must submit a claim and has deductible and co-payment charges, just as he would under a traditional fee-for-service insurance policy.

Indemnity, or Fee-for-Service, Plans: Medicine the old-fashioned way. Patients receive a bill from their doctor or hospital for each service rendered. They submit the bill to their insurance company and the company pays it. These plans provide the maximum choice of physicians and hospitals but are the most expensive kinds of plans.

Managed Care: A general term for organizing doctors and hospitals into health care delivery networks with the intent of lowering costs and “managing” the medical care provided. HMOs were the earliest form of managed care. Today there are many different kinds of plans offered.

Network: A selected group of physicians, hospitals, laboratories and other health care providers who participate in a managed care plan’s health delivery program and agree to follow the plan’s procedures.

Out-of-Pocket Maximum: A limit on all of the insured’s out-of-pocket expenses (including deductibles and co-payments) for treatment of illness or injury. At this point, the insurance company will begin covering 100 percent of the charges. If you use non-network providers, the out-of-pocket maximum could be as high as $10,000.

Preferred Provider Organization (PPO): A managed care plan to which doctors and hospitals agree to provide discounted rates. PPOs usually don’t exercise tight management over medical care. For example, they usually don’t use primary care physicians to coordinate patient care. Patients are reimbursed 80 percent to 100 percent for treatment within the PPO versus 50 percent to 70 percent outside of it.

Premium: The cost of the health plan coverage. It does not include any deductibles or co-payments the plan may require.

State Quality Control

In many states both the Department of Health and the Department of Insurance jointly oversee HMOs in the state. The Insurance Department oversees the business and financial aspects of HMOs and investigates consumer complaints that deal with contract issues. (Click State Insurance Departments for the number to call in your state.) The Department of Health oversees the quality of care delivered to residents, conducts on-site surveys and investigates consumer complaints dealing with the quality of health care.

We currently have information on who is overseeing managed care in the following states:
Arizona, California, Colorado, Florida, Missouri, New York, Ohio, Pennsylvania, Vermont


The Arizona Department of Insurance licenses and monitors the business and financial aspects of HMOs. It also receives and investigates consumer complaints. If the complaint deals with quality or access to health care facilities (such as clinics or hospitals), it may be referred to the Department of Health. If the complaint deals with the practice of an individual physician, it may be referred to the Board of Medical Examiners, which licenses and oversees the conduct of Arizona physicians. The Department of Insurance will release information about the number of complaints registered against HMOs. For additional information, or to file a complaint, call the Consumer Affairs Division at 800-325-2548.

The Arizona Department of Health reviews a plan’s initial application for licensure to ensure that all required services are available and accessible to enrollees. The Department also reviews proposed HMO expansions to new service areas.


The California Department of Corporations (DOC) licenses and monitors the business and financial aspects of health care service plans, including all HMOs, reviews a plan’s access to, and quality of, care during its initial licensure application, and conducts an on-site review of HMOs at least once every five years or more frequently if necessary. The DOC also requires that health plans establish and maintain a grievance system for the receipt, handling and disposition of complaints. If a member is not happy with the plan’s handling of his or her grievance, a complaint can be filed with the DOC. If the complaint is urgent or of an emergency care nature, the member can call the DOC directly. The Los Angeles area number for complaints is 213-736-3104.


The Colorado Division of Insurance licenses and monitors the business and financial aspects of HMOs an investigates consumer complaints. If the complaint deals with the quality if health care, it may be referred to the Colorado Department of Health for investigation. For additional information, or to file a complaint, call 303-894-7490.

The Colorado Department of public Health and environment reviews a plan’s initial application for licensure to ensure that all required services are available and accessible to enrollees. The Department also reviews proposed HMO expansions to new service areas.


The Florida Department of Insurance licenses and monitors the business and financial aspects of HMOs. It also receives and investigates consumer complaints dealing with contractual issues such as claims denial. The Department will release information on the number of complaints logged against an HMO. For more information or to file a complaint, call 800-342-2762.

The Florida Agency for Health Care Administration regulates the quality of care provided by HMOs and handles consumer complaints in that regard. As of 1992, the state requires that all HMOs have their quality assurance programs reviewed by a nationally recognized accreditation organization. Three national agencies met Florida’s standard: the Accreditation Association for Ambulatory Health Care, the Joint Commission for the Accreditation of Healthcare Organizations, and the National Committee for Quality Assurance. Plans had to be inspected for accreditation by 1994 and every few years thereafter. Those plans which did not meet accreditation standards were required to submit an action plan for correcting their deficiencies and to reschedule an inspection.

The Agency for Health Care Administration also responds to consumer complaints about the quality of care provided in HMOs, such as emergency referrals to specialists or coverage for certain procedures (call 800-226-1062), and has a Statewide Provider and Subscriber Assistance Panel (904-921-5458) for HMO enrollees who have exhausted their HMO’s internal grievance process but are not satisfied with the outcome. The Agency will release information about quality of care complaints against individual plans (904-487-0640).


The Missouri Department of Insurance licenses and monitors HMOs and investigates consumer complaints. It also regulates the plan’s grievance process, by which enrollees can appeal a plan’s decision on whether or not certain medical care is needed or on the amount of reimbursement. The Department does not, however, review quality of care.


The New York State Department of Health and the New York State Department of Insurance jointly oversee HMOs in the state of New York. The Insurance Department oversees the business and financial aspects of HMOs and investigates consumer complaints that deal with contract issues. The New York State Department of Health oversees the quality of care delivered to residents, conducts annual on-site HMO surveys and investigates consumer complaints dealing with the quality of health care.


The Ohio Department of Insurance licenses and monitors the business aspects of HMOs and investigates consumer complaints. The Department of Insurance requires that consumers with complaints about their HMOs first go through the plan’s internal grievance process, which must be made clear in materials that the enrollee’s receive. If the consumer is not happy with the outcome of that process, they may appeal to the Department of Insurance who will then investigate. If the complaint deals with quality or access to health care, the complaint will be referred to the Department of Health for its own investigation.

The Ohio Department of Health reviews a plan’s access to and quality of care during its initial licensure application, as well as when an HMO expands its service area. The Department of Health also conducts at least one on-site review of HMOs every three years. (PPOs are not regulated by the state.)


The Pennsylvania Department of Health (DOH) licenses HMOs and monitors the care delivered to enrollees. In 1988, DOH initiated an innovative quality oversight program. All HMOs in the state are required to get an independent review of their quality assurance programs by an external review organization within 12 months of licensure and every three years thereafter. The review includes a random sample of medical records to evaluate the quality of care provided.


Oversight of HMOs in Vermont is jointly shared between the Vermont Department of Banking, Insurance and Securities, which licenses HMOs and reviews their financial solvency, and the Vermont Health Care Authority, which oversees the quality of care and conducts periodic evaluations of Vermont HMOs. Both agencies also investigate consumer complaints.

In addition, the Vermont Employers Health Alliance, conducts consumer satisfaction surveys of the employees of member companies who are in managed care and other health plans. Over 3,000 employees participated in the 1995 survey, the results of which were used to help plans identify problem areas and establish quality improvement goals.

Managed Care Report Cards

Report cards are coming — but don’t worry, you won’t have to show them to your parents. These are to help you evaluate managed care plans. As the country moves in the direction of managed care, report cards will be invaluable in helping consumers compare the various plans. Fully 77 percent of all employers now offer managed care to their employees, and more than one out of every two insured Americans is covered under a managed care plan.

The goal of report cards is to present information designed to answer the question: How do competing health plans compare in terms of keeping people healthy and caring for them when they are sick? Until now, many managed care plans have been publishing this information voluntarily, but each has its own definitions and methods for gathering data. To make report cards truly useful to consumers, guidelines had to be created so that companies could standardize what information is collected and how it is gathered.

Developing Uniform Report Card Criteria

The National Committee for Quality Assurance (NCQA), a Washington-based non-profit organization, whose mission is to improve the quality of care in managed care organizations, has been working with health maintenance organizations (HMOs) and business representatives to develop a standardized set of performance measures for health plans. Together they created HEDIS 2.0 (Health Plan Employer Data and Information Set), which was released in November 1993. HEDIS has over 60 criteria describing plan performance in three key areas of interest to consumers: quality of care (using indicators to reflect the plans’ effectiveness in preventing and treating disease), access to care and patient satisfaction (using results of consumer satisfaction surveys), and financial indicators (reflecting membership disenrollment and the plans’ financial soundness).

What Can Report Cards Tell You?

Report cards will be important resources for health care consumers. They will allow a prospective member to compare the quality of care, the costs and what members have to say about the plan. Keep in mind, however, that report cards rate the plans according to the different HEDIS criteria, but don’t rank them overall. It is up to consumers to make their choices based on what is most important to them.

1. Quality of care. In general, the preventive care provided by managed care plans can be judged by the quality of their programs. Prevention takes many forms depending on the age and gender of the plan member. The percentage of plan members who receive preventative treatments will give report card readers an indication of how seriously plans take their commitment to health maintenance and how likely they are to make preventive measures, like the ones listed below, a part of the routine care they provide.

  • Pediatric immunizations. These immunizations are good indicators of medical management and plan performance. Health plans should ensure that children are vaccinated at appropriate times because immunizations have clear, positive outcomes, such as preventing polio and rubella.
  • Prenatal care. Health plans that provide timely, thorough and effective prenatal care can help to reduce the likelihood of delivering a low birthweight infant and can detect maternal health problems early in the pregnancy. Good prenatal care also plays a critical role in reducing infant mortality.
  • Cancer screening. Women age 52 — 64 should have mammography screenings for breast cancer every two years because death rates from the disease can be significantly reduced by early detection through mammograms. In addition, annual pap smears for women age 21 — 64 are key to reducing the mortality associated with cervical cancer.
  • Cholesterol screenings. High cholesterol levels have been linked to heart disease. In order to identify patients who might be developing heart disease, it is important to check cholesterol levels regularly, at least every five years. Detecting high cholesterol levels also provides an opportunity to recommend life style and nutrition changes and should lead to periodic monitoring of the condition.
  • Treating illness. How good is a health plan at treating members who are sick? This can be assessed by indicators that measure efforts to prevent the onset of complications from certain conditions. For example, diabetics are at high risk of becoming blind unless certain eye examinations are performed annually and appropriate treatments provided when an eye condition is detected. To what extent a plan performs such examinations reflects the quality of care provided to these members. Similarly, in treating members with mental illness, it is important to know to what extent a health plan conducts regular follow up therapy on patients after hospitalization. A follow up visit within 30 days of discharge provides a good measure of efforts to detect early post-hospitalization reactions and medication problems. Another indicator of quality of care involves the rate of hospitalization for asthmatics. The higher the rate, the greater the likelihood that plan members are not being managed as well as they should be.

2. What other plan members think of the care they’ve received. Unlike the other report card indicators, gauging plan member satisfaction is a subjective evaluation based on survey results. In these surveys, members rate how easy it is for them to get treatment (availability of appointments, distance to provider, cost issues, referrals to specialists), what they think of the health professionals they had contact with, how well they believe they were cared for, whether they would recommend their health plan to others, whether they intend to stick to their plan or switch, and what their overall satisfaction level is. Clearly, gaining insight into the opinions of plan members is extremely useful.

Future Forecast

Public pressure to better understand health care choices, bring down costs and increase the quality of care will be the incentive for plans to participate in report card projects. Furthermore, as patients become active consumers in response to the published data, companies will improve their performance as defined by the assessment indicators. The bottom line is that consumers armed with report card results will be able to make more informed decisions about different managed care plans. Hopefully, such open competition will then lead plans to provide better services.

However, in order to ensure that plans don’t simply start spending dollars solely to bolster their performance on the current set of indicators, it will be important for groups like NCQA to keep refining and expanding their criteria to ensure that they really represent good care. And, to make sure that data is accurate, properly collected and comparable across plans, it is important to use independent third parties to audit the report card data (examine each plan’s records to verify their accuracy and adherence to criteria definitions).

Consumers should expect that as more plans participate and more report cards are published and evaluated, the information gathered will continue to improve and evolve. But vigilance will continue to be important. Employers and consumers — the purchasers of health care services — will have to keep the pressure on for accountability and meaningful measurements.

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