How Managed Care Can Set Limits on Medical Technology - and Look Good

Project on Insurer Decisionmaking Regarding Coverage of Medical Technologies

From 1996 to 1998, Harvard Pilgrim Health Care examined how insurers, employers and other purchasers of health care decide which medical technologies to provide to consumers under resource constraints.

Key Results

Under the grant, the investigators:

  • Conducted a detailed study of Harvard Pilgrim, including videotaping of decision-making committees and in-depth interviews with key figures.
  • Developed three case studies on technology decision-making in managed care organizations, including Kaiser Permanente of Northern California, Oregon Blue Cross Blue Shield and Aetna U.S. Healthcare.
  • Prepared a case study on the Oregon Health Resources Commission, a state agency chartered to review and assess medical technology.

Key Findings

The researchers presented these findings in articles in The Journal of the American Medical Association, New England Journal of Medicine, Health Affairs, the British Medical Journal and the Hastings Center Report:

  • Managed care plans make decisions about providing new technologies by:
    • Considering and balancing multiple values and priorities.
    • Developing "mini-guidelines" specifying criteria for which patients would be eligible for the use of new technologies, how to manage quality and costs of the service, and how to evaluate it.
    • Rarely applying a strict budget ceiling; cost, cost-effectiveness, and opportunity cost were seldom considered in coverage decisions.
    • Increasingly relying on organizations that specialize in technology assessment to provide such assessments — in part because of strong demand.
  • Managed care plans and other insurers face a "legitimacy" problem and need to persuade a skeptical public and practitioners that they should retain the authority to make limit-setting decisions about new technologies.
  • Managed care plans must show that their decisions regarding coverage for new technologies are publicly accessible, reasonable, open to appeal and regulated by an independent entity.

Funding

The Robert Wood Johnson Foundation (RWJF) provided $188,661 in funding to support the study from January 1996 to December 1998.