Physician Evaluations of Care Management Practices in Medicaid Programs

March 1, 2005
George H. Avery, PhD
George H. Avery, PhD

Douglas R. Wholey, PhD
Douglas R. Wholey, PhD

Jon B. Christianson, PhD
Jon B. Christianson, PhD

Volume 11, Issue 3

Objective: To assess differences in care management practicesfor Medicaid beneficiaries in predominantly commercial and predominantlyMedicaid health plans.

Study Design: Physicians in the networks of 8 managed careplans participating in Medicaid programs were surveyed regardingthe availability and usefulness of care management practices andthe overall quality of care management. The responses of physiciansin plans serving predominantly Medicaid enrollees were contrastedwith the responses of physicians in predominantlycommercial plans who cared for Medicaid enrollees.

Methods: Logistic regression analysis was used to calculateadjusted odds ratios relating to the availability of care managementpractices. Multiple regression techniques were used to constructcomparisons of adjusted means relating to the usefulness of practicesand the overall quality of care management.

Results: Physicians in predominantly commercial plans reportedgreater availability of care management practices. No patternsof differences were noted in ratings of the usefulness of practicesif available. Physicians in predominantly commercial plans ratedthe quality of care management higher than physicians in predominantlyMedicaid plans. However, there remains room forsubstantial improvement for commercial and other Medicaid contractingplans.

Conclusions: Commercial plans add value to Medicaid programs,and efforts to discourage their withdrawal from participationare justified. However, physician evaluations support the potentialfor better care management in all types of contracting plans.

(Am J Manag Care. 2005;11:156-164)

During the 1990s, Medicaid programs adopted astrategy of contracting with managed care plansto organize and deliver care to beneficiaries.1Medicaid programs contract with managed care plans of2 general types, including (1) plans that have providernetworks that serve predominantly the Medicaid populationand the uninsured or are created to contractwith Medicaid (predominantly Medicaid [PM] plans) and(2) commercial plans that have large provider networksthat serve predominantly private sector enrollees (predominantlycommercial [PC] plans). This study usesphysician survey data to compare the reports of physiciansin these 2 types of health plans concerning themanagement of care for their Medicaid patients. Theresults are timely for policy makers in light of recentwithdrawals of PC plans from Medicaid managed careprograms and the increasing reliance of Medicaid onPM plans to accomplish program objectives.


When they were established, state Medicaid programsreimbursed contracting providers through fee-for-service arrangements, reflecting the healthinsurance environment at that time. Responding to costpressures and mirroring similar trends in commercialhealth insurance markets, many states began to transformtheir Medicaid programs from a fee-for-servicemodel to a managed care model in the 1980s. By 1997,all but 2 states had obtained rule waivers to establishsome type of Medicaid managed care program.2

For some time, commercial managed care organizationsexhibited little interest in serving Medicaid beneficiaries.Low reimbursement rates, fears of adverse riskselection, and difficulties in managing the care of thispopulation discouraged market entry.3 In addition, therequirement that enrollment in a managed care plan bea voluntary choice of the Medicaid beneficiary limitedthe potential size of the market. In the early 1990s,many Medicaid programs began to mandate participationin managed care plans by beneficiaries (Arizonaadopted this approach in the early 1980s), increasingthe number of potential enrollees and therefore makingparticipation more attractive for commercial plans. Inaddition, new plans continued to form that includedproviders already serving the Medicaid population, suchas public hospitals or community health clinics.3 Theseplans often were viewed by safety-net providers asimportant vehicles for preserving access to their historical patient population in light of competition from commercialplans.

In 1996, the trend toward increased commercialplan participation in Medicaid began to reverse, largely(but not exclusively) because of economic factors.4From 1997 to 2000, between 10% and 17% of participatingcommercial plans withdrew each year, withentries by these plans into the Medicaid market droppingto zero. More than 100 commercial plans left themarket from 1997 to 1999, more than 3 times as manyas in the previous 3 years. Nineteen states saw fewerparticipating commercial plans in 1999 than in 1997.5Significant commercial plans such as Aetna and Cignaleft the Medicaid marketplace and were replaced largelyby plans that focused on serving Medicaid enrollees.6

There are indications that differences may exist inthe way that PM and PC plans manage the services theyprovide to Medicaid beneficiaries.7 For example, PMplans in California appear more likely to collaboratewith local health departments in the delivery of publichealth services than PC plans serving the same population.8 Nationally, plans with at least 75% of their membersenrolled in Medicaid are significantly more likely totailor programs to the special needs of the Medicaidpopulation, such as having specific AIDS, pediatric asthma,and high-risk pregnancy management guidelines.These plans also are more likely to assist with transportationand to develop participant literacy programs.9Nevertheless, concerns remain that the withdrawal ofPC plans from Medicaid will reduce the access to careand the quality of care for the Medicaid population.1These concerns reflect, in part, a presumption that caremanagement practices differ between the 2 types ofplans in presence and in effectiveness.

Studies of Medicaid managed care have addressed differencesbetween fee-for-service delivery and managedcare programs in general10-12 or between Medicaid andcommercial patients in the same health plan.13 Cooperand Kuhlthau14 suggest that evaluation of Medicaid managedcare also should address the structure and processof healthcare and include not only administrative databut also evaluations of programs by providers. Harris etal15 found that physician evaluations of Medicaid managedcare quality were strong predictors of patient satisfaction.Fairbrother16 and Cukor17 and their colleaguesconducted interviews with New York City Medicaidmanaged care organization medical directors and pediatricstaff and reported that health maintenance organizationquality oversight had little effect on providers.They found that practitioners had little knowledge ofhealth maintenance organization quality goals, cliniciansreceived little useful feedback on quality practices,and quality incentives were invisible or ineffective tophysicians delivering services. Gazewood et al18 foundsignificantly greater physician dissatisfaction with clinicalautonomy in the Missouri Medicaid managed careprogram than in commercial health maintenance organizationsor traditional fee-for-service Medicaid. Theysuggested that physician perceptions could be importantfor evaluation of these programs. On the otherhand, a study19 of the Arizona Health Care CostContainment System found few differences, outside ofthe strength of the physician-patient relationship, inphysicians'assessments of PC and PM plans.

Measures of health plan quality (such as HealthEmployer Data and Information Set or ConsumerAssessment of Health Plans) focus on the delivery of careto the patient but not the quality of the actual care managementpractices, such as network management, careguidelines, disease management programs, and performancereports provided by health plans. Brown20,p83 notesthat "making care available and managing it are two differentmatters,"and Ku and Hoag3 found that plans managedby safety-net providers had significant weaknessesin their management systems. On the other hand,Draper et al6 recently reported that PM plans were morelikely to use traditional managed care practices and thatPC plans had abandoned or greatly modified these practicesfor their private sector members.

This study is the first, to our knowledge, to examinedifferences in care management practices in PM plansversus PC plans participating in Medicaid, as reportedby their network physicians. Physicians are uniquelysituated to report on and evaluate care managementpractices15-17 and can offer a critical perspective onwhether the degree and quality of care management differin these types of plans. Their assessments haveimplications for how policy makers might view the lossof PC plan participation in Medicaid programs and theincreasing reliance of these programs on PM plans.


To collect information on physician perspectivesregarding the care management practices of specifichealth plans, 2 of us (DRW and JBC) led a research teamthat developed a physician survey instrument (availableat: that was administeredto a sample of physicians drawn from differentregions of the United States.21-24

Instrument Design

The survey instrument was based on a conceptualframework for physician assessment of health plan quality.A part of that instrument contained items measuring the presence of specific care management practices(eg, "Do you receive reminder information about ongoingcare needs for your patients in the plan?") andphysician assessments of the usefulness of these practices.The survey also asks physicians to rate the qualityof various aspects of care management in 3 areas,including care provided by physicians, pharmacy care,and inpatient care (Table 1). These survey items formthe basis for our comparisons. In addition, the surveycollected information on physician demographics (eg,age, sex, and board certification), practice characteristics(eg, solo or group practice and hours seeing patientsper week), and physician-health plan relationships (eg,percentage of patients from the plan and years with theplan).21-24 This information was used to construct controlvariables for the analyses.

Survey Administration

From November 2000 to early 2001, a total of 4162physicians were surveyed from 8 managed care plansin Florida, Colorado, and Washington that participatedin state Medicaid programs. This group of physicianswas a subgroup of a larger study of physicians representing23 health plans in Florida, New York, Colorado,Pennsylvania, and Washington. Surveys were administeredusing both mail and telephone modes to comparethe two.

Three of the 8 Medicaid plans were PC in nature, withMedicaid enrollment ranging from 6.9% to 30.8%. Thetotal enrollment in individual PC plans was large (range,100 000-600 000). In contrast, in PM plans, Medicaid enrolleescomprised 49.8% to 92.8% of the total enrollees,with the total enrollment in PM plans ranging from 24 000to 151 000. The plan with 49.8% of its enrollees drawnfrom Medicaid was included in the PM group because a substantialportion of its remaining enrollees were participantsin a state-sponsored health insurance program for low-incomeuninsured residents. The 3 PC plans had been inexistence for a longer period than the PM plans, and 2 wereaffiliated with national for-profit managed care companies.

The total number of physicians in the 8 Medicaidplans responding to the survey was 1165. During thesurvey, however, numerous errors in physician lists,such as incorrect addresses, lists that included physiciansnot currently associated with the health plan, andindividuals who were not physicians were identified. Ofthe 4162 individuals sampled, 709 errors were discovered.Taking these errors into account, we estimate aresponse rate of 33.7% (1165/(4162-709)).To studynonresponse bias, we used detailed data from the largerstudy for 2 health plans for which detailed physiciancharacteristics were available. No major differenceswere observed between respondents and nonrespondentsby specialty or volumeof patients with the healthplan.22

Analytic Constructs

In our analysis, we used thePRECEDE (Predisposing,Reinforcing, Enabling Causesin Education, Diagnosis, andEvaluation) model to classifymanaged care practicesaccording to whether theyfocused on enabling, reinforcing,or predisposing aspects ofbehavior.25 Enabling refers to"?skills, resources or structuralbarriers that facilitate orprevent behavior."26,p2021Included in this category were4 questions that asked physiciansabout reminders,patient-specific drug information,guidelines, and diseasemanagement programs. Thereinforcing category includedquestions about health planperformance in 5 areas, including the use of referrals ortests, provision of specific preventive care services,patient satisfaction, prescription drug use by cost or inaccord with guidelines, and hospital admissions andlengths of stay. The predisposing category focused on initiativesrelating to education and training and was measuredwith 3 questions that asked physicians aboutopportunities for continuing medical education, trainingin avoidable hospital admissions, and informing themhow to respond to patient questions about direct-to-consumeradvertised drugs. We compared physicianresponses regarding the use of care management practicesof each type for Medicaid patients. This allowed usto address, from physicians'perspective, the applicationof care management practices for Medicaid beneficiariesserved in PM versus PC plans. A single question wasasked regarding the availability of each care managementpractice, and practices were assigned to single domains.

In addition to investigating differences in the use ofcare management practices, we compared physicianperceptions of the usefulness ofcare management practices.Physicians who reported that aspecific management practicewas used for Medicaid patientswere asked to rate its usefulnessusing a 4-point scale (1, not atall useful; 2, not very useful; 3,somewhat useful; and 4, veryuseful). In the analysis, we comparedthe mean responses(range, 1-4 points) for physiciansin PM versus PC plans.

Finally, physicians wereasked to provide their overallevaluation of the quality of caremanagement practices, groupedinto 3 categories, including careprovided by physicians, pharmacycare, and inpatient care(Table 1). Multiple surveyitems were used to construct ascale representing each type ofcare. In a previous analysis,these scales were found to bereliable, were stable acrossphysician types, and had constructvalidity.21-24

Analytic Approach

For all of the plans, physicianswere asked specificallyabout Medicaid patients.Multiple logistic regression analysis was used to determinewhether the type of plan the physician was in (PMvs PC) was associated with physician responses concerningavailability. The analyses report the odds ratiosof physicians in PC plans reporting the availability of aspecific practice compared with physicians in PM plans.Ninety-five percent confidence intervals (lower andupper bound) are reported.

The analyses of the usefulness and of the scale valuesrelated to the quality of care management practices wereconducted using SAS PROC MIXED (SAS Institute, Cary,NC). The health plan was used as a random effect to controlfor potential autocorrelation among errors becausephysicians were sampled within plans.27 The empiricalestimating option in PROC MIXED, a robust estimator,was used to reduce the confounding effects of factors thatwere identified in preliminary analyses.27 The explanatoryvariables in all regressions were the following: indicatorsfor the type of plan (PC or PM), type of practice (solo,single-specialty group, or multiple-specialty group), survey mode (mail or telephone), specialist versus primarycare physician, age, sex, race, ethnicity, region in theUnited States, board certification, years in practice as aphysician, hours seeing patients per week, number ofpatients seen per day, participation in administrativework, number of other health plans contracted with,physician's percentage of patients from the health plan,physician's number of years with the health plan, healthplan enrollment, and fixed effects for geographic location.Inclusion of the practice-type variable mitigates the concernsnoted by Rich and Kralewski28 regarding studiesthat have failed to account for potential confounding differencesin practice structure and specialist status thatcould bias results.

Table 2 gives the mean values for the characteristicsof physician respondents in each type of health plan.For the most part, physician characteristics were similaracross plan types. Respondent physicians in PMplans were slightly younger, with less time in practice,than PC physicians. They were less likely to be maleand to be in solo practice. At the time of the survey, PMphysicians had been with their health plans fewer years.


Availability of Care Management Practices

Table 3 gives the differences in physician reports onthe availability of care management practices, beforeadjusting for differences in respondent and practicecharacteristics. A higher percentage of PC physiciansreported the presence of all 4 enabling practices. Insome cases, the differences were large. For instance,48.0% of PC physicians reported receiving reminders ofongoing care needs for their Medicaid patients versus30.6% of PM physicians. A larger percentage of PCphysicians also reported the presence of predisposingpractices for Medicaid patients, with PC plans muchmore likely to provide continuing medical education(19.8% vs 7.9%). The picture is less consistent for reinforcingpractices, with PC physicians being more likelyto report the presence of 3 of 5 practices. Particularlystriking were the differences in the availability ofreports on the use of drugs by Medicaid patients; 32.9%of PC physicians said that these reports were receivedversus 12.3% of PM physicians. Overall, in 10 of the 12unadjusted comparisons, PC physicians were more likelyto report the presence of a specific care managementpractice, with the differences being substantial on a percentagebasis in many of the comparisons. This suggestsa much more aggressive approach to the management ofcare for Medicaid enrollees in PC plans than in PMplans, at least in the view of physicians. However, inonly 2 of the 12 comparisons (clinical guidelines anddisease management programs) did more than half ofthe responding physicians report the presence of a specificpractice. From this standpoint, it would not appearthat aggressive care management is occurring forMedicaid patients in managed care plans, regardless ofthe plan type.

Table 4 gives the adjustedodds ratios for the availability ofcare management practices, witha ratio greater than 1 indicatingthat the practice is more likely tobe available in PC plans, asreported by physicians. Theresults in Table 4 are generallyconsistent with the unadjustedcomparisons. All 4 differences inenabling practices have oddsratios greater than 1 and are statisticallysignificant, indicatingthat the practices are more likelyto be observed in PC plans. Theresults for reinforcing practicesare mixed. There is no significanteffect of the type of health planon referral reports, qualityreports (immunizations, mammographyrates, blood sugar levels,or blood pressuremeasurements), or admissionsreports. Physicians in PC plans are lesslikely to report receiving patient satisfactionreports and are more likely to reportreceiving drug use reports. For predisposingpractices, PC physicians are morelikely to report receiving information ondrug advertisements, while there are nosignificant differences in the other 2effects (continuing medical educationopportunities and avoidable admissionstraining). Overall, after controlling for differencesin physician demographics andpractice characteristics, 7 of the 12 comparisonsof physician reports are significant,and 6 of the 7 indicate more activemanagement of care for Medicaid patientsin PC plans.

Usefulness of Care ManagementPractices

The availability of care managementpractices provides only a partial pictureof their effect. For physicians whoreported that a practice was available, weasked them to rate its usefulness in helpingthem manage care, with a higherscore on a 4-point scale indicating amore positive evaluation. Table 5 givesthe unadjusted comparisons of the ratingsof the usefulness of care management practicesprovided by physicians in PC vs PM plans. Overall, themean ratings of the usefulness are in the mid-range ofthe scale. Physicians serving Medicaid patients see clinicalguidelines, disease management programs, andreports on the use of referrals and tests as the most usefulpractices. Reports on drug use and inpatient admissionswere viewed as least useful, on average. In all 12comparisons, physicians in PC plans who reported thepresence of a practice had a more positive view of itsusefulness than physicians in PM plans.

Table 6 gives the results of tests for the statistical significanceof the differences in the usefulness ratings ofPC vs PM physicians, controlling for physician demographicsand characteristics of practice settings. Insome cases, the number of respondents is small(because of the low prevalence of some managementpractices), making it less likely to observe significantdifferences at conventional levels of significance (eg,α= .01 and α= .05). Therefore, we report actual significancevalues in Table 6 for all comparisons. The smallnumber of respondents for some categories also resultsin substantial differences between the unadjusted meanvalues for some measures (eg, continuing medical educationopportunities) and the adjusted mean values inTable 6. There were 4 differences in adjusted ratings ofthe usefulness that were significant at α= .05. Two werepredisposing measures, and in both cases PM physiciansrated their usefulness more highly than PC physicians.The other 2 significant differences related to reinforcingfactors: PC physicians rated admissions reports as moreuseful than PM physicians, while the reverse was truefor reports on the use of referrals or tests. However, inthe latter case, the unadjusted mean rating of eachgroup of physicians exceeded 3 on a 4-point scale, providingstrong overall support for this practice on thepart of both groups.

Overall, the findings based on the comparisonsof the adjusted means in Table 6 are less clear thanthe comparisons of the unadjusted means wouldsuggest. A conservative conclusion is that PM physiciansfind predisposing care management practicesto be more useful than their PC counterparts.

Overall Quality of Care Management

Table 7 and Table 8 give the unadjusted and adjustedcomparisons of the mean scale values reflectingphysician ratings of the quality of care managementpractices in the 3 generalareas of physician management,pharmacy management,and inpatientmanagement (Table 1). Inthe unadjusted comparisons(Table 7), PC physiciansrated the quality ofphysician managementand pharmacy managementin their plans morehighly than PM physicians;ratings of inpatientmanagement practiceswere virtually identical.The mean ratings forinpatient care were substantiallyhigher than formanagement practices inthe other 2 areas, inwhich the means werebelow the midpoint on theratings scale. The adjustedmeans (Table 8) weresimilar to the unadjustedratings, with the differencesin physician andpharmacy care ratingsachieving significance at α= .01. Overall, the resultsindicate that PC physicians have a more favorable viewof the quality of physician and pharmacy managementfor Medicaid patients in their health plans than PMphysicians, but in both cases the ratings suggest substantialroom for improvement.


This article examines different types of managedcare practices present in different types of health plansserving Medicaid beneficiaries, the usefulness of specificpractices, and the overall quality of care management,from the perspective of physicians participatingin the plan networks. Specifically, we focused on possibledifferences in the managed care practices of PCplans, as applied to Medicaid enrollees, and the practicesof health plans that had as a primary businessfocus the managing of health services for Medicaid beneficiariesand other low-income groups. These comparisonswere motivated by the movement of commercialplans into and out of the Medicaidmarket and the issues that this hasraised for Medicaid program management.

Our results suggest that, from theperspective of physicians, Medicaidpatients in PC plans are more likely tohave their care actively managed.Furthermore, physicians in PC plansrate the quality of care managementpractices, as applied to Medicaidenrollees, more highly than physiciansin PM plans rate the same practices.Although our study cannotdirectly address why this is the case,it may be that the larger size of PCplans allows them to spread the costsof developing and implementing caremanagement practices over moreenrollees. These practices may bedemanded by private sector employersfor their employees, making themarginal cost of extending them toMedicaid beneficiaries low. Also, PCplans have been in operation for alonger period, with more opportunityfor organizational learning regardingthe factors that result in more effectiveimplementation of care managementpractices. In addition, PC plansmay have a more mature informationinfrastructure (eg, facilitating accessto reminders, guidelines, and reports). However, irrespectiveof the differences between PC and PM plans,except for clinical guidelines and disease managementprograms, only a small number of physicians in eithergroup reported the presence of care management practicesfrequently cited in the literature as supportive ofquality healthcare.

Our findings suggest that PC health plans add value toMedicaid managed care programs and, therefore, that theefforts of many Medicaid programs to encourage theirparticipation in and discourage their withdrawal fromMedicaid contracts may be justifiable, within limits.However, the findings also point to considerable potentialfor improvement in care management in both types ofcontracting plans. In this regard, collaborative effort withPM plans to enhance care management practices mayimprove care for beneficiaries in a more cost-effectivemanner than offering higher health plan payments, if thatis what is required to secure stable PC participation.

These conclusions should be tempered by the limitationsin our study design. The physicians we surveyedwere drawn from a small number of plans that are notgeographically representative of the United States as awhole. Although these plans appear "typical"of plansthat hold Medicaid contracts, caution should be exercisedin generalizing the study findings to all Medicaidprograms. Within the plans selected, the responserates of the physicians we surveyed were low to moderate,although somewhat comparable to otherresponse rates of physician mail surveys.29 Therefore,our physician respondents may not be representativeof physicians nationwide who serve Medicaid beneficiariesenrolled in managed care plans. We were limitedin our ability to assess differences in thecharacteristics of respondents and nonrespondents, butthe analysis we conducted indicated that the 2 groupswere comparable.22

In addition to possible limitations in the generalizabilityof the findings, physicians provide only one perspectiveon the management practices used by healthplans contracting with Medicaid programs. Other potentialsources of data include regulatory filings, medicalchart audits, and beneficiary surveys. However, the perspectiveof physicians is unique and potentially important.For instance, although health plans may berequired to submit reports to Medicaid programs on theirmanaged care practices, physicians observe the actualapplication of these practices on a day-to-day basis whentreating patients. Although Medicaid beneficiaries can besurveyed regarding their experience in health plans, theylikely do not have the training or comparative knowledgethat allows them to place that experience in the sameperspective as physicians. Our findings suggest thatphysician reports concerning managed care practicescan be useful for Medicaid programs in targeting qualityimprovement resources and, on a larger scale, in assessingthe possible consequences of shifts in the types ofhealth plans serving Medicaid beneficiaries.


We appreciate the assistance of the other members of the PhysiciansEvaluating Health Plans research team: Andrew B. Bindman, MD; StevenBorowsky, MD, MPH; Bruce Center, PhD; Paula Henning, MA; DavidKnutson, MA; Michael Finch, PhD; Margaret King-Davis, MS; Mary JoO'Brien, MS; Todd Rockwood, PhD; and Maureen Smith, MD, PhD. We alsogratefully acknowledge the contributions of Jessica Haupt, BA, in preparingthe manuscript.

From the Departments of Psychology and Management Science (GHA), Division ofHealth Services Research and Policy, School of Public Health (DRW), and Department ofHealthcare Management, Carlson School of Management (JBC), University of Minnesota,Duluth.

This research was supported by grant 32366 from The Robert Wood JohnsonFoundation, Princeton, NJ.

Address correspondence to: George H. Avery, PhD, Departments of Psychology andManagement Science, University of Minnesota, 1207 Ordean Court, Bohannon Hall 320,Duluth, MN 55812. E-mail:

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