MANAGED CARE AND CAPITATION IN CALIFORNIA - HOW DO PHYSICIANS AT FINANCIAL RISK CONTROL THEIR OWN UTILIZATION

Objective: To describe the structure and range of utilization manageme nt methods initiated by physicians in response to capitation. Design: Cross-sectional questionnaire. Setting: A large network-model health m aintenance organization (133 contracting physician groups) in Californ ia. Participants: 94 (71%) physician groups caring for 2.9 million cap itated patients. Measurements: Self-reported use of five major utiliza tion management methods. Results: All physician groups reported using gatekeeping and preauthorization for certain referrals or tests. Most also used profiling of utilization patterns (79%), guidelines (70%), a nd managed care education (69%). Most physician groups asked gatekeepe rs to submit preauthorization requests for specialty referrals and res tricted patient self-referral. For example, 60% of groups required pre authorization for an internal medicine subspecialty referral, and 7% a llowed patient self-referral. Most groups also asked gatekeepers to ob tain preauthorization for many tests (for example, 95% for magnetic re sonance imaging and 53% for pulmonary function tests). Preauthorizatio n requests were denied infrequently (less than 10% of the time) by mor e than 75% of groups. Of the 54 groups reporting utilization profiles to their physicians, 61% never adjusted for case-mix among patients an d more than 60% suggested practice changes to their physicians based o n utilization. Fewer than 35% of the groups used written guidelines fo r expensive tests that required preauthorization (such as angiography) . Conclusions: Physicians are responding to capitation by using utiliz ation management techniques, some at early stages of development, that were previously used only by insurers. This physician-initiated manag ement approach represents a fundamental transformation in the practice of medicine.