Prescription drug costs accounted for 20 percent of increases in U.S. health spending in 1998 and are the fastest growing line-item for most HMOs. In response to escalating expenditures, many HMOs are transferring risk for drug costs to physician organizations. The underlying assumption is that responsibility for pharmacy costs provides incentives for physician groups to adopt innovative drug use management strategies to control drug cost increases and improve quality. No prior studies have examined the complex relationship between physician group risk-bearing for pharmacy costs, adoption of drug use management innovations, and effects on quality and cost of care. The Robert Wood Johnson Foundation funded this multiple-case study of 20 physician organizations in managed care markets nationwide. In-depth interviews with clinical and administrative leaders of physician organizations and HMO partners were conducted. Study findings reveal that physician organizations range from those successfully managing pharmacy risk to those incurring substantial debts due to drug risk. A common pattern finds many groups that assumed pharmacy risk now attempting to eliminate that aspect of their contracts. Even in the absence of drug risk, physician organizations are engaging in innovative drug use management strategies to constrain rising drug costs (e.g., elimination of drug samples, pharmacist or nurse-directed clinics, computerized aides to prescribing). Findings from this exploratory study elucidate not only how risk relationships spur innovation, but also what drives innovation in the absence of pharmacy risk. Implications of the findings for major stakeholder groups -- private/public regulators, legislators, purchasers and patients -- will be discussed.
Learning Objectives: Describe the nature of provider risk-bearing for prescription drugs; Summarize current patterns of drug use management by health care market; Discuss implications of drug use management strategies for quality of care
Keywords: Health Care Managed Care, Physicians
Presenting author's disclosure statement:
Organization/institution whose products or services will be discussed: None
I do not have any significant financial interest/arrangement or affiliation with any organization/institution whose products or services are being discussed in this session.