Key strategy to limit managed care drug costs failing, su...( With rising concern over the cost of th...)

Key strategy to limit managed care drug costs failing, survey shows

With rising concern over the cost of the new Medicare prescription drug benefit program going into effect January, 2006 and estimated to cost $593 billion over the next decade a new UCSF study reveals that a key cost-cutting strategy employed by HMOs for 15 years is simply not working.

Health insurance companies have increasingly sought to limit the amount of expensive drugs doctors prescribe to patients in order to keep drug costs form spiraling, according to the study authors. A major strategy has been to restrain drug costs by assuring that a medical group will make money if member doctors prescribe within the drug budget set by the insurance company, and will lose money if member doctors over-prescribe.

The underlying assumption is that placing doctors at financial risk for their drug prescribing practices will lead them to adopt new practices to control drug costs, the authors explain. These practices include hiring pharmacists for expert advice, using "physician profiling" to compare doctors' prescribing patterns, and adhering to professional protocols that specify what each drug should be prescribed for, at what dose and for how long.

The new study shows that providing financial incentives for doctors to rein in their prescription practices has not led to cost-cutting innovations.

The study is being published in the August issue of the Journal of Health Policy, Politics and the Law, available mid-September. It is based on a survey of executives in more than three dozen physician groups and HMOs in four large U.S. cities.

The survey found widespread dissatisfaction with the HMO strategy of making doctors financially liable for prescription drug costs above a certain limit. It also found doctors were often confused or unaware of the incentives, either because of unclear contracts with HMOs or failure of HMOs to share drug cost information with doctors appropriately. In addition, frequent changes in the contract made
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Contact: Wallace Ravven
wravven@pubaff.ucsf.edu
415-476-2557
University of California - San Francisco
14-Sep-2005

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