Financial incentives and drug spending in managed care

Health Affairs

Volumn 18, Issue 2, 1999, Pages 189-200

  Hillman, Alan L ^a,b   Pauly, Mark V ^c   Escarce, José J ^a   Ripley, Kimberly ^d   Gaynor, Martin ^e   Clouse, Jon ^f   Ross, Richard ^g  

^a UNIVERSITY OF PENNSYLVANIA   (United States)

^b University's School of Medicine   (United States)

^c UNIVERSITY OF PENNSYLVANIA   (United States)

^d Davis Institute   (United States)

^e CARNEGIE MELLON UNIVERSITY   (United States)

^f UNITED HEALTHCARE   (United States)

^g Health Care Policy Research   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

ADULT; ARTICLE; COST; DRUG COST; DRUG UTILIZATION; ECONOMICS; FEMALE; HEALTH INSURANCE; HEALTH MAINTENANCE ORGANIZATION; HUMAN; MALE; MIDDLE AGED; PERSONNEL MANAGEMENT; REGRESSION ANALYSIS; REIMBURSEMENT; STATISTICAL MODEL; UNITED STATES;

ADULT; COST SHARING; DRUG COSTS; DRUG UTILIZATION; FEMALE; HEALTH MAINTENANCE ORGANIZATIONS; HUMANS; INDEPENDENT PRACTICE ASSOCIATIONS; INSURANCE, PHARMACEUTICAL SERVICES; LEAST-SQUARES ANALYSIS; LOGISTIC MODELS; MALE; MANAGED CARE PROGRAMS; MIDDLE AGED; PHYSICIAN INCENTIVE PLANS; REIMBURSEMENT MECHANISMS; UNITED STATES;

EID: 0005784374     PISSN: 02782715     EISSN: None     Source Type: Journal    
DOI: 10.1377/hlthaff.18.2.189     Document Type: Article

References (27)

1. P.B. Ginsburg and J.D. Pickreign, "Tracking Health Care Costs," Health Affairs (Fall 1996): 140-149; and K.R. Levit et al., "National Health Spending Trends in 1996," Health Affairs (January/February 1998): 35-51.
2. P.B. Ginsburg and J.D. Pickreign, "Tracking Health Care Costs," Health Affairs (Fall 1996): 140-149; and K.R. Levit et al., "National Health Spending Trends in 1996," Health Affairs (January/February 1998): 35-51.
3. A.L. Hillman, "Managing the Physician: Rules versus Incentives," Health Affairs (Winter 1991): 138-146; R.H. Miller and H.S. Luft, "Managed Care Plan Performance since 1980: A Literature Analysis," Journal of the American Medical Association 271, no. 19 (1994): 1512-1519; W. Manning et al., "A Controlled Trial of the Effect of a Prepaid Group Practice on Use of Services," New England Journal of Medicine 310, no. 23 (1984): 1505-1515; and S. Greenfield et al., "Variations in Resource Utilization among Medical Specialties and Systems of Care: Results from the Medical Outcomes Study," Journal of the American Medical Association 267, no. 12 (1992): 1624-1630.
4. A.L. Hillman, "Managing the Physician: Rules versus Incentives," Health Affairs (Winter 1991): 138-146; R.H. Miller and H.S. Luft, "Managed Care Plan Performance since 1980: A Literature Analysis," Journal of the American Medical Association 271, no. 19 (1994): 1512-1519; W. Manning et al., "A Controlled Trial of the Effect of a Prepaid Group Practice on Use of Services," New England Journal of Medicine 310, no. 23 (1984): 1505-1515; and S. Greenfield et al., "Variations in Resource Utilization among Medical Specialties and Systems of Care: Results from the Medical Outcomes Study," Journal of the American Medical Association 267, no. 12 (1992): 1624-1630.
5. A.L. Hillman, "Managing the Physician: Rules versus Incentives," Health Affairs (Winter 1991): 138-146; R.H. Miller and H.S. Luft, "Managed Care Plan Performance since 1980: A Literature Analysis," Journal of the American Medical Association 271, no. 19 (1994): 1512-1519; W. Manning et al., "A Controlled Trial of the Effect of a Prepaid Group Practice on Use of Services," New England Journal of Medicine 310, no. 23 (1984): 1505-1515; and S. Greenfield et al., "Variations in Resource Utilization among Medical Specialties and Systems of Care: Results from the Medical Outcomes Study," Journal of the American Medical Association 267, no. 12 (1992): 1624-1630.
6. A.L. Hillman, "Managing the Physician: Rules versus Incentives," Health Affairs (Winter 1991): 138-146; R.H. Miller and H.S. Luft, "Managed Care Plan Performance since 1980: A Literature Analysis," Journal of the American Medical Association 271, no. 19 (1994): 1512-1519; W. Manning et al., "A Controlled Trial of the Effect of a Prepaid Group Practice on Use of Services," New England Journal of Medicine 310, no. 23 (1984): 1505-1515; and S. Greenfield et al., "Variations in Resource Utilization among Medical Specialties and Systems of Care: Results from the Medical Outcomes Study," Journal of the American Medical Association 267, no. 12 (1992): 1624-1630.
7. Levit et al., "National Health Spending Trends in 1996."
8. HMO-PPO Digest 1995 (Kansas City, Mo.: Hoescht Marion Roussel, 1995).
9. Levit et al., "National Health Spending Trends in 1996."
10. See, for example, R.H. Egdahl and C.H. Taft, "Financial Incentives to Physicians," New England Journalof Medicine 315, no. 1 (1986): 59-61; and A.L. Hillman, "Financial Incentives for Physicians in HMOs: Is There a Conflict of Interest?" New England Journal of Medicine 317, no. 27 (1987): 1743-1748.
11. See, for example, R.H. Egdahl and C.H. Taft, "Financial Incentives to Physicians," New England Journalof Medicine 315, no. 1 (1986): 59-61; and A.L. Hillman, "Financial Incentives for Physicians in HMOs: Is There a Conflict of Interest?" New England Journal of Medicine 317, no. 27 (1987): 1743-1748.
12. Greenfield, "Variations in Resource Utilization;" and D.G. Smith and D.M. Kirking, "Impact of Consumer Fees on Drug Utilization," PharmacoEconomics 2 (1992): 335-342.
13. Greenfield, "Variations in Resource Utilization;" and D.G. Smith and D.M. Kirking, "Impact of Consumer Fees on Drug Utilization," PharmacoEconomics 2 (1992): 335-342.
14. J.P. Weiner et al., "Impact of Managed Care on Prescription Drug Use," Health Affairs (Spring 1991): 140-154.
15. See, for example, B.L. Harris, A. Stergachis, and L.D. Reid, "The Effect of Pharmaceutical Co-payments on Utilization and Cost of Pharmaceuticals in a Health Maintenance Organization," Medical Care 28, no. 10 (1990): 907-917; and R.E. Johnson et al., "The Effect of Increased Prescription Drug Cost-Sharing on Medical Care Utilization and Expenses of Elderly Health Maintenance Organization Members," Medical Care 35, no. 11 (1997): 1119-1131.
16. See, for example, B.L. Harris, A. Stergachis, and L.D. Reid, "The Effect of Pharmaceutical Co-payments on Utilization and Cost of Pharmaceuticals in a Health Maintenance Organization," Medical Care 28, no. 10 (1990): 907-917; and R.E. Johnson et al., "The Effect of Increased Prescription Drug Cost-Sharing on Medical Care Utilization and Expenses of Elderly Health Maintenance Organization Members," Medical Care 35, no. 11 (1997): 1119-1131.
17. W.G. Manning et al., "A Two-Part Model of the Demand for Medical Care: Preliminary Results from the Health Insurance Study," in Health, Economics, and Health Economics, ed. J. van der Gaag and M. Perlman (New York: North-Holland Publishing Co., 1981), 103-123.
18. The physician-visit and pharmacy copayment variables were log-transformed, because this produced a better fit than the original dollar scale. The regression models also adjusted for other possible determinants of drug spending, including patient characteristics (age, sex, family size, duration of plan membership with pharmacy benefits, urban versus rural residence, ethnicity, and mean household income in ZIP code of residence), physician characteristics (percentage physicians in solo versus group practice and number of plan members seen as a proportion of an average U.S. primary care physician's patient panel), and indicator variables for specific plans.
19. J.P. Weiner et al., "Development and Application of a Population-Oriented Measure of Ambulatory Care Case Mix," Medical Care 29, no. 5 (1991): 452-472.
20. H.S. Glauber and J.B. Brown, "Uses of Health Maintenance Organization Databases to Study Pharmacy Usage in Diabetes Mellitus," Diabetes Care 15, no. 7 (1992): 870-876; and M.L. Osborne et al., "Use of an Automated Prescription Database to Identify Individuals with Asthma," Journal of Clinical Epidemiology 48, no. 11 (1995): 1393-1397.
21. H.S. Glauber and J.B. Brown, "Uses of Health Maintenance Organization Databases to Study Pharmacy Usage in Diabetes Mellitus," Diabetes Care 15, no. 7 (1992): 870-876; and M.L. Osborne et al., "Use of an Automated Prescription Database to Identify Individuals with Asthma," Journal of Clinical Epidemiology 48, no. 11 (1995): 1393-1397.
22. M. Von Korff, E.H. Wagner, and K. Saunders, "A Chronic Disease Score from Automated Pharmacy Data," Journal of Clinical Epidemiology 45, no. 2 (1992): 197-203.
23. Ibid.; and R.E. Johnson et al., "Replicating the Chronic Disease Score (CDS) from Automated Pharmacy Data," Journal of Clinical Epidemiology 47, no. 10 (1994): 1191-1199.
24. Ibid.; and R.E. Johnson et al., "Replicating the Chronic Disease Score (CDS) from Automated Pharmacy Data," Journal of Clinical Epidemiology 47, no. 10 (1994): 1191-1199.
25. Full tabulation of regression results in an appendix is available from the authors. Mail your request to Alan L Hillman, 423 Guardian Drive, University of Pennsylvania, Philadelphia, Pennsylvania 19104-6021.
26. S.M. Schappert, National Ambulatory Medical Care Survey: 1994 Summary, Advance Data from Vital and Health Statistics 273 (Hyattsville, Md.: National Center for Health Statistics, 1996).
27. HMO and PPO Industry Profile, 1995-96 (Washington: American Association of Health Plans, 1996).