Negotiating the New Health System: Purchasing Publicly Accountable Managed Care

Abstract The transformation to managed care is one of the most important and complex changes ever to take place in the American health system. One key aspect of this transformation is its implications for public health policy and practice. Both public and private buyers purchase managed care; increasingly, public programs that used to act as their own insurers (i.e., Medicare, Medicaid and CHAMPUS) are purchasing large quantities of managed care insurance from private companies. The transformation to managed care is altering the manner in which public health policy makers conceive of and carry out public health activities (particularly activities that involve the provision of personal health services). The degree to which managed care changes public health and in turn is altered by public health will depend in great measure on the extent to which public and private policy makers understand the implications of their choices for various aspects of public health and take steps to address them. Because both publicly and privately managed care arrangements are relatively deregulated, much of the dialogue between public health and managed care purchasers can be expected to take place within the context of the large service agreements that are negotiated between buyers and sellers of managed care products. This is particularly true for Medicaid because of the importance of Medicaid coverage, payment and access policies to public health policy makers, and because of the public nature of the Medicaid contracting process. A nationwide study of Medicaid managed care contracts offers the first detailed analysis of the content and structure of managed care service agreements and the public health issues they raise. Four major findings emerge from a review of the contracts. First, most of the agreements fail to address key issues regarding which Medicaid-covered services and benefits are the contractor's responsibility and which remain the residual responsibility of the state agency. Second, most contracts fail to address the legal and structural issues arising from the relationship between the managed care service system and the public health system, including such key matters as access to care for communicable diseases and contractors' relationship to state public health laboratories. Third, many contracts are silent on health agencies' access to data for surveillance and community health measurement purposes. Finally, many contracts may be developed with only a limited understanding of the key public health–related issues facing the community from which the members will be drawn. The CDC and state and local public health agencies must expand their activities in the area of managed care contract specifications. For several years the CDC has been involved in an ongoing effort to develop quality of care measures to be collected from all companies through the HEDIS process. As important as this effort is, it represents only an attempt to measure what managed care does rather than an a priori effort to shape the underlying policy and organizational structure of managed care itself. Integrating managed care with public health policy will require this type of affirmative effort with both Medicaid agencies as well as other managed care purchasers.