Health Plans Reinstating Rules on Providing Care to Trim Costs

Surging healthcare costs have prompted a return to some unpopular money-saving measures that were scaled back after the backlash against managed care during the late 1990s, according to a new study.

Requirements such as referrals for specialists and pre- authorizations for some medical services are quietly reappearing in some health plans, according to the study, released Wednesday and published in the policy journal Health Affairs.

“Health plans are revisiting some of the cost measures that were vilified in the backlash against managed care because there is still some optimism that the tools can be effective,” said Glen Mays, one of the study’s three authors and an associate professor and director of research at the department of health policy and management at the University of Arkansas for Medical Sciences.

The study was conducted by interviewing 1,000 health professionals in 12 metropolitan regions in the U.S., including Orange County, every two years beginning in 1996. However, the bulk of the research was taken from interviews done in 2002-03, Mays said.

Mays said five to six years of double-digit increases in healthcare costs have pushed employers and health plans to reconsider old options, because new ideas such as shifting more costs to employees haven’t kept expenses from ballooning.

Employees balked at restrictive health maintenance organization policies during the late 1990s and employers responded by offering plans with much broader networks and fewer limitations. But the labor market was tight at the time and employers didn’t want to risk losing employees.

Mays said the combination of higher unemployment that keeps workers at their jobs and employees’ frustration with rising premiums and co-payments may make some restrictions more palatable.

However, the study’s authors said the new requirements were not as severe as in the 1990s.

“Insurers are being more selective on how they use these measures,” Mays said.

For example, the study found that since 2001, five of the 56 health plans in the survey increased their use of prior authorization requirements for outpatient services.

The study also found that in 2000-01, Aetna Inc. eliminated prior authorization for about 50 inpatient and outpatient services in its HMOs and preferred provider plans in northern New Jersey.

But the company reinstated the policy in 2002-03 after use sharply increased.

Even though plans are being more careful to use restrictions wisely, it doesn’t mean employees won’t balk.

Benefits consultant Ed Kaplan of New York-based Segal Co. said one of his clients began requiring pre-authorizations in July on tests that cost more than $500. Patients have already complained.