Introduction

Mayer Davidson, MD

The topic, “The Impact of Managed Care on the Care of Diabetes Patients” in this issue of Diabetes Spectrum’s From Research to Practice section may be a bit premature for two reasons. First, there is very little published research in this area as of yet. Second, managed care has not penetrated into most of the country to a significant degree and, therefore, the practice of most health professionals caring for patients with diabetes is not yet occurring in a major way in this setting. However, that time is coming quickly, and most of the readers of this section will soon be enmeshed in managed care.

In this introduction, I would like to describe how managed care is positioned in California because, unless there is a paradigm shift, the situation in California is a harbinger of things to come for the rest of the country. Since managed care has the potential, both good and bad, to profoundly influence the care received by people with diabetes, it behooves us to understand its structure and impact as we start to interact with it.

The medical insurance coverage of the California population of 31 million people is depicted in Figure 1. The issue for patients with diabetes in this emerging health-care system is choice. Although primary care physicians care for more than 90% of people with diabetes, these patients can choose to see an endocrinologist/diabetologist, a diabetes educator, or a dietitian. More commonly, primary care physicians can freely choose to refer diabetes patients in this direction without either a financial risk to themselves or the need to convince a utilization review committee to allow it, although visits to diabetes educators or dietitians may not be reimbursed by many insurance plans.

In California, only the 2% of the population covered by full indemnity insurance have a completely free choice of their medical care providers. At the other end of the spectrum, the 39% of the population in closed systems (i.e., those under prepaid, or capitated, arrangements) have little choice. The medical groups contracting with health maintenance organizations (HMOs) are either multispecialty groups (in whom specialty referral would be limited to members or programs of that group) or physicians operating independently in their offices. However, patients of both cadres of physicians are subject to the “gatekeeper” concept. This system places the onus on primary care physicians to be parsimonious with referrals, usually because of financial pressures affecting themselves, the groups in which they practice, or both. If referrals are made in a closed system, they must be to subspecialists and programs within that system (assuming such programs and personnel are available).

Patients covered under managed indemnity plans (16% of the population) have limited choice. In preferred provider organizations (PPOs), physicians and other professionals contract to deliver care at a discounted fee-for-service rate. Patients must use these professionals to be reimbursed for the medical care provided. Some PPO plans incorporate a point-of-service (POS) option. Under this arrangement, patients can go outside of the PPO plan to receive care, but they incur more out-of-pocket expense because reimbursement rates to non-PPO providers are lower, the deductibles are often higher, and the benefits (i.e., kinds of services covered) may be fewer.

Choices are also limited for the 24% of the California population covered by Medicare and MediCal (California’s Medicaid program) for several reasons. Most physicians in California will not care for MediCal patients because of the extremely low rates of reimbursement and the administrative hassles involved. In addition, there is a concerted effort by the state government to enroll these patients into capitated HMO plans, i.e., into closed systems. Approximately 600,000 MediCal patients have been enrolled so far.

Medicare patients used to have more limited choices than they currently do in California. Although less onerous than MediCal, until managed care became predominant, many physicians would not see Medicare patients because of the lower reimbursement rates and administrative requirements. Ironically, today in California, physicians consider Medicare coverage good, and these patients are sought after. However, there is also a move to entice patients with Medicare insurance coverage into capitated HMOs. Approximately 700,000 Medicare pa-tients in California are so enrolled.

Of course, the 19% of the California population who are uninsured have virtually no choice unless they can afford to pay for their medical care out of pocket. Thus, taking into consideration the number of MediCal and Medicare patients enrolled in closed systems, 2% of the residents of California have a free choice of their medical care providers, 36% have a limited choice, and fully 62% have no choice.

Given that so many patients will be unable to influence to any large degree the provision of their diabetes care, we need to know the quality of care that is being delivered currently, the potential that managed care has for improving on the outcomes observed today, and the barriers that exist to translating that potential into reality. The nine papers discussed in this From Research to Practice section deal with these issues.

Acknowledgment

I am grateful to Robert C. Ossorio, MD, for his guidance through the intricacies of medical insurance coverage in California and the structure and relationships of organizations involved in managed care.