QUALITY ASSESSMENT IN CONTRACTING FOR TERTIARY CARE SERVICES BY HMOS - A CASE-STUDY OF 3 MARKETS

Background: Few studies have examined the provision of tertiary care s ervices by managed care organizations (MCOs). Moreover, little is know n about the role of quality assessment and quality assurance mechanism s in the contracting process. Site visits were conducted in 1995 in th ree geographic areas to describe and evaluate the contracting processe s for tertiary care services, especially neonatal intensive care and c oronary artery bypass graft surgery, of health maintenance organizatio ns (HMOs). Methods: Three market areas in the United States, each with differing levels of ''maturity'', as primarily defined in terms of ma naged care penetration, were selected for study. Interviews were condu cted with HMO and hospital managers about the processes for identifyin g potential tertiary care hospitals and mechanisms for quality assessm ent and quality improvement (QI) that are considered in the contractin g process. Findings: The most sophisticated contracting arrangements w ere found in the most mature market-where HMOs select hospitals for te rtiary care services based on both the price and quality of services, with quality assessed through both objective and subjective data. Yet in all three markets, quality assessment was the least well-developed component of tertiary care contracting. Even in the mature market, we found inconsistent use of even validated quality of outcomes measures in hospital contracting. Conclusion: The potential of MCOs to increase quality depends on their ability to identify high-quality hospitals a nd their willingness to direct enrollees to those hospitals. Yet incon sistent evidence was found that mechanisms for evaluating and rewardin g quality are being fully adopted in the three markets studied.