Voters in Oregon are likely to be asked to decide in November whether to ban capitation in the state. Viewed as a test case for other states, the drive is being led by Gordon Miller, a Salem ophthalmologist.

More than 73,000 signatures are needed to place the initiative on the ballot, and so far about 30,000 have been collected. Political consultant Tom Mann, who is assisting Miller with the statewide effort, is confident that all the necessary signatures will be obtained by the July 5 deadline.

If voters approve the initiative, Oregon will be the first state to have such a ban on its books. The anti-capitation measure would limit provider payment methods to fee-for-service, hourly wages, salary or expense reimbursement. If enacted, the law would go into effect by the end of 1997. Organizations that failed to comply would lose their licenses.

The problem is not with managed care, but with capitation, "an unethical process that eliminates the doctor being the patient advocate," says Mann. "Capitation rewards people for withholding care. Doctors should be allowed to make decisions based on the needs of the patient and not on the financial arrangements of a managed care organization."

Mann is confident that the initiative will pass, but that won't end the battle. Even if it is enacted, the measure is likely to face a court challenge from supporters of capitation. To those who ask how costs can be held down without capitation, Mann says, "Medical savings accounts will make the industry competitive again."

Indeed, many states are moving ahead with enactment of medical savings account measures (see map below). Last year, 12 states passed legislation permitting the establishment of these accounts. Another dozen may consider similar measures this year, with Pennsylvania, Ohio, New York, Florida, Georgia and Nebraska among those likely to pass such bills.

States with existing or expected medical savings account legislation

MSAs are designed to cover most of the cost of an individual's medical care. With MSAs, employers buy catastrophic care policies that cover medical expenses above a certain amount — usually around $1,500. The savings in health insurance premiums as well as some additional money employers provide is then used to set up MSAs for each worker.

The accounts cover medical expenses up to the point where the catastrophic insurance kicks in. The state laws permit state tax deductions for MSA contributions. In addition, "MSAs eliminate out-of-pocket expenses and co-payments," says Jack Strayer, federal affairs director for the Council for Affordable Health Insurance, in Alexandria, Va., a major MSA advocate.

The accounts also are appealing because they preserve consumer choice. Any unused account balances go directly to workers at year's end.

Supporters of MSAs say they encourage individuals to become more prudent buyers of health care, since they, not a third party, are paying for the services they receive. Managed care advocates, however, say MSAs may create adverse selection problems in which young, healthy individuals opt for the MSA/catastrophic policy so they can build up large balances, while older and sicker individuals remain in fee-for-service or managed care plans, driving up their cost.

Untrue, says Strayer. "We have no evidence of adverse selection. There are about 6,000 businesses throughout the country using MSAs and there is not one instance of adverse selection." MSAs should not be limited to indemnity plans, he says. There are ways that they can be affixed to an HMO so that some of the employer's payment is channeled into the MSA and some into an HMO.

Iowa is entering uncharted territory as the first state to enact an electronic billing law. But it's already running into some roadblocks.

The Iowa legislature, which unanimously passed the statute in April 1994, intended electronic billing to serve as the basis of a "community health management information system" to assist with policy decisions. But the high cost of setting up a central data reposi- tory for the system is likely to delay the effective date of the law by a year, says Ed Whitver, manager of medical services for the Iowa Medical Society.

— Joan Szabo


Managed Care’s Top Ten Articles of 2016

There’s a lot more going on in health care than mergers (Aetna-Humana, Anthem-Cigna) creating huge players. Hundreds of insurers operate in 50 different states. Self-insured employers, ACA public exchanges, Medicare Advantage, and Medicaid managed care plans crowd an increasingly complex market.

Major health care players are determined to make health information exchanges (HIEs) work. The push toward value-based payment alone almost guarantees that HIEs will be tweaked, poked, prodded, and overhauled until they deliver on their promise. The goal: straight talk from and among tech systems.

They bring a different mindset. They’re willing to work in teams and focus on the sort of evidence-based medicine that can guide health care’s transformation into a system based on value. One question: How well will this new generation of data-driven MDs deal with patients?

The surge of new MS treatments have been for the relapsing-remitting form of the disease. There’s hope for sufferers of a different form of MS. By homing in on CD20-positive B cells, ocrelizumab is able to knock them out and other aberrant B cells circulating in the bloodstream.

A flood of tests have insurers ramping up prior authorization and utilization review. Information overload is a problem. As doctors struggle to keep up, health plans need to get ahead of the development of the technology in order to successfully manage genetic testing appropriately.

Having the data is one thing. Knowing how to use it is another. Applying its computational power to the data, a company called RowdMap puts providers into high-, medium-, and low-value buckets compared with peers in their markets, using specific benchmarks to show why outliers differ from the norm.
Competition among manufacturers, industry consolidation, and capitalization on me-too drugs are cranking up generic and branded drug prices. This increase has compelled PBMs, health plan sponsors, and retail pharmacies to find novel ways to turn a profit, often at the expense of the consumer.
The development of recombinant DNA and other technologies has added a new dimension to care. These medications have revolutionized the treatment of rheumatoid arthritis and many of the other 80 or so autoimmune diseases. But they can be budget busters and have a tricky side effect profile.

Shelley Slade
Vogel, Slade & Goldstein

Hub programs have emerged as a profitable new line of business in the sales and distribution side of the pharmaceutical industry that has got more than its fair share of wheeling and dealing. But they spell trouble if they spark collusion, threaten patients, or waste federal dollars.

More companies are self-insuring—and it’s not just large employers that are striking out on their own. The percentage of employers who fully self-insure increased by 44% in 1999 to 63% in 2015. Self-insurance may give employers more control over benefit packages, and stop-loss protects them against uncapped liability.