Cost cutting gets creative: How managed care works in 2005

Health plans are tweaking details and offering small bonuses to enlist doctors in programs to cut expenses in the name of improving care.

By Robert Kazel, AMNews staff. Feb. 28, 2005.

For the managed care industry, a funny thing happened on the way to cost-control and quality-improvement initiatives: Insurers discovered they need to reach out to physicians -- in a big way, and in many ways.

While HMO efforts in the 1990s to trim medical costs might be symbolized by a clenched fist cautioning doctors to toe the line, a metaphor for cost-cutting strategies in 2005 would be a hand beckoning doctors to join, to participate, to innovate. Not surprisingly, physicians also are being asked to drop their view of managed care as synonymous with control, manipulation and interference.

Insurers this year will introduce, test or expand strategies that aim to cut medical spending in many ways, and most will rely on the enthusiasm and good will of doctors to realize their goals. Plans are rolling out these programs, including new disease-management initiatives, pay-for-performance incentives and redesigned insurance products, as a means of appeasing employers that refuse to take rising insurance costs in stride.

"Traditional managed care tactics have been exhausted," says Ed Kaplan, national practice leader for the Segal Co. in New York.

The following are some cost-reduction initiatives, to be stepped up by plans and payers, that many physicians will see taking shape this year.

Many doctors in the past have viewed disease-management programs with suspicion. They see them as imposed by health plans, sometimes with less-than-scientific research backing them up. Some doctors resent them because these programs typically have contacted plan subscribers directly, leaving doctors feeling left out. In some cases, paperwork has just been onerous.