Managed care and public health: Conflict and collaboration

This article reviews the relationship between managed care and public health. Managed care, with its seemingly infinite structural and organizational variation, dominates the modern American health-care system for the non-elderly U.S. population. Through its emphasis on standardized practice norms and performance measurement, coupled with industrial purchasing techniques, prepayment, risk downstreaming, and incentives-based compensation, managed care has the potential to exert considerable influence over the manner in which the health-care system is organized and functions. Given the degree to which the attainment of the basic public health goal of protecting the public against population health threats for which there are known and effective medical interventions depends on the successful interaction between public health policy and the medical care system, the importance of a viable working relationship between public health and managed care is difficult to overstate.

The potential for conflict between public health and medical care is nothing new; indeed, delineating the boundaries of public health to shape and influence medical practice has occupied the energies of policymakers and the medical industry for well over a century.1 But the transformation to managed care raises this ongoing dialogue to new levels of significance because of the enormous implications that flow from the modern approach to organizing, buying, and furnishing health care. Through its merger of the functions of medical care and resource allocation, and its overlay of the conventions of the commercial insurance industry directly onto the medical care enterprise itself,2 managed care (whether tightly or loosely organized) has grafted risk avoidance3 directly into medical practice. There is no greater conceptual gulf than that which exists between this core concept of insurance and the fundamental principles that underlie public health. Thus, while the essence of the struggle between medical care and public health previously lay in the tensions between professional autonomy and state control, the modern challenge arises from the tensions between broad public health considerations on the one hand and contractual and risk avoidance autonomy on the other.

Whether one side of this struggle is more powerful is unclear. What is clear is that the central public policy question in the coming years is whether and under what circumstances the basic characteristics of the modern approach to medical care delivery and financing will give way to certain basic imperatives in public health.

This article begins with an overview of the core structural and design elements of managed care. The article then places the core functions of public health in a managed care context. The article then turns to one of the most important aspects of the managed care/public health relationship: the power to set and finance the clinical standard of care for the assessment, diagnosis, and treatment of conditions and diseases that carry with them basic public health implications. The article concludes with a discussion of the current national debate over managed care and public accountability and the degree to which it addresses basic public health concerns.

BACKGROUND AND OVERVIEW

As recently as 1980, virtually all insured Americans, whether publicly or privately insured, had coverage that existed independent of the practice of medicine itself.4 A very small minority of all insured individuals were enrolled in prepaid health-care plans, the structural (even if not philosophical) precursors of the modern managed care enterprise. Public and private health insurers already had begun to make limited use of cost management techniques, such as prospective assessment of the medical necessity of covered benefits and services. But these limited steps met with controversy among the public and in the courts; indeed, even as late as 1977, an Illinois court was willing to reject an insurer's claims that it had the contractual authority to prospectively limit care, and in doing so stated:

It is a reasonable conclusion that a layman would not think that "medical necessity" would be construed as a limitation so that his insurer, not his doctor, would pass final judgment on the necessity for his hospitalization ....5

Twenty years later, the landscape has been completely altered. In a single generation, the American health system was transformed into a "stunning array of new health care financing and delivery entities" that "took responsibility for managing resources," and for channeling "enrollees to providers with whom preferential contracts had been renegotiated."6 As of 2000, more than 90 percent of all persons with employer-based health insurance coverage were enrolled in some form of managed care,7 and 79 percent of covered workers had only managed care options to choose from.8 Half of all Medicaid beneficiaries were enrolled in managed care, and for most, enrollment in managed care was compulsory. Managed care had gained a foothold in Medicare, although the relationship has been relatively rocky. Managed care contracts and practice techniques have become staples of the Defense Department, the Department of Veterans Affairs (which runs the nation's single largest healthcare system), and the Indian health system. Even in the case of the State Children's Health Insurance Program (SCHIP), studies suggest that more than two-thirds of states with separately administered SCHIP plans (i.e., programs that are separate from Medicaid) use their SCHIP allotments to purchase managed care arrangements.9 As a result of this pervasiveness, managed care operates in spheres once dominated by public health-care delivery systems and principles.

The roots of the modern managed care era can be found in the efforts of employers in the early 1980s to bring industrial techniques to health-care purchasing through the use of preset cost and quality expectations. This development arose in the face of rampant medical care cost escalation and a recessionary economy, coupled with the rejection of the "learned profession" exemption from federal and state antitrust law.10 These two advances - the first on the demand side and the second on the supply side - revolutionized the power of group sponsors to buy medical care from health professionals and other medical suppliers in accordance with preset cost and quality expectations. As employers brought industrial techniques to health-care purchasing, public sponsors also began to enthusiastically follow suit. In leading the way, employers pursued these purchasing strategies in their employer-sponsored health plans. As a result, this foray into large-scale purchasing of medical care from organized groups operating in accordance with specifications set by the purchaser was grounded in the principles and conventions of employer-sponsored health insurance.

The basic elements of managed care

Experts in managed care note that "there is no universally accepted managed care terminology."11 Despite its various forms, managed care can be defined as any arrangement in which, for a preset fee (i.e., a premium or a capitation payment), an entity sells a defined set of medical care and administrative services to a sponsor or purchaser and offers services to enrollees through a network of participating providers that operate under written contractual or employment agreements and whose selection and authority to furnish covered treatments is controlled by the entity. This definition captures the essence of managed care, regardless of whether the plan is labeled as a health maintenance organization (HMO), an individual practice association (IPA), a preferred provider organization (PPO), an integrated service network, a disease management company, a provider services organization (PSO), or some other name.

Regardless of the label they use, managed care organizations (MCOs) combine the elements of insurance and prepayment with medical care itself, selling care from members of their provider networks to purchasers for a pre-negotiated fee.12 Thus, the essence of managed care is the merger of coverage and care.13 More specifically, MCOs merge medical care and the conventions and norms of commercial health insurance financing, with its extensive limitations on coverage, its delineation of contractual responsibilities, and its techniques for minimizing sponsors' and insurers' exposure to financial risk.

Most managed care plans (other than traditional staff model companies that employ their medical and administrative staff) tend to operate as virtual health systems. That is, the companies build their products through a cascade of contractual agreements between the MCO and group sponsor on the one hand, and the company and its medical, financial, and administrative subcontractors and suppliers on the other. The contracts and subcontracts that spell out the structural and financial framework of the relationship typically are not visible to the naked eye. Indeed, with the exception of the prime contracts between certain public purchasers and managed care companies, these agreements are considered proprietary. A typical managed care contract between a sponsor and an MCO will contain specifications in the areas of coverage, provider network composition and capabilities, service access, quality improvement and oversight, provision of information, and business terms and conditions.14

Regardless of the terminology under which they conduct business, managed care entities possess certain features, each of which plays a significant role in making the managed care enterprise function. Understanding how the enterprise functions is critical to understanding the constraints inherent in the relationship between managed care and public health.

The first basic element of the managed care enterprise is the contract between the managed care entity and a prime sponsor (an employer, the Medicaid program, or some other group purchaser).15 This contract describes covered treatments and procedures and the terms of payment. It also sets forth the basic duty on the part of the entity to undertake care itself through the organization and oversight of a participating provider network that meets certain specifications of adequacy.16 This dual obligation on the part of managed care entities to both finance care and furnish it has been recognized by the courts, which have viewed MCOs as wearing the two hats of insurer and health-care provider.17

With the exception of Medicaid managed care contracts, which, like Medicaid itself, frequently cover treatments and services for chronic illness and disability,18 the standard managed care prime contract reflects the rules of conventional insurance. These rules seek to constrain the outer limits of insurance to interventions that are described as precisely as possible in order to avoid financial risk. This means that coverage is limited to services and treatments that diagnose and treat illnesses and injuries and other specified conditions. Most forms of preventive coverage are excluded as outside the scope of risk financing.19 Because the conventions of insurance are designed to respond to the health needs of a working, healthy population,20 medical necessity may be either overtly or implicitly measured in accordance with a definition that turns on the concepts of significant improvement and a return to normal functioning. While social norms have shifted considerably and the public has come to expect the integration of persons with disabilities into the work world, these changes in social expectations have had only the most limited impact on the design of health insurance. Although there have been federal and state public policy efforts to make conventional insurance more responsive to persons with greater health needs, public reforms have yielded little other than the most limited steps to curb the use of preexisting condition exclusions and the most overt disparities in physical and mental health coverage.21

A second key element of managed care is the formation and oversight of a provider network through which contracted services are delivered. Members can be restricted to this network or alternatively can be incentivized to use the network through cost-sharing differentials. Regardless, the network is the realization of the managed care entity's medical care contractual undertaking through a series of cascading contracts with individual and group medical practices, institutions, and other health-care providers and suppliers. This provider network, selected by the prime contractor, operates under the direction of the prime sponsor, which assumes quality oversight responsibilities. A prime contractor also may contract with "sub-prime" entities such as behavioral health organizations, pharmacy benefit management companies, and disease management firms, to manage portions of the prime contract. By 1995, over 80 percent of the more than 600,000 practicing physicians in the United States reported that they were either employed by or had entered into at least one contractual arrangement with a managed care plan. This represents a one-third increase in 5 years in the proportion of practicing physicians who report participating in managed care.22 Managed care participation thus has become fundamental to the ability to practice medicine in the United States.

As health-care purchasers, MCOs have exceedingly broad power to compose their networks and negotiate the terms of participation, and network selection is among the most closely guarded types of information maintained by managed care plans. Recent developments at the state level have broadened the body of law applicable to network selection and de-selection, and industry accreditation standards also address this issue. However, other than broadly drafted "any willing provider" statutes confined to very narrow classes of providers such as physicians, dentists, or pharmacists, neither the law nor accreditation standards dictate the structure or composition of networks.23

A third essential element of managed care is the use of preset pricing to control the cost and flow of medical care. To be sure, recent evidence of a growing escalation in healthcare costs shows the limits of this strategy (no single purchaser, however powerful, can control the larger events that affect the price of goods and services).24 At the same time, there is a general consensus that managed care did in fact reduce the rate of health-care cost growth for many years and remains a powerful tool for controlling the rate of cost increase.25 Because managed care is at its core a health-care under-- taking for a fixed price, risk downstreaming becomes essential,26 as does the use of financial incentives and penalties aimed at encouraging reductions in resource utilization.27 In sum, risk sharing between MCOs and their providers is a basic feature of managed care;28 this is true regardless of whether the prime contract includes financial risk for the prime contractor or, in the case of a self-insuring plan, is for third-party administration only.29

The final structural element of the managed care enterprise for purposes of this article is control over the treatment practices of physicians. Harold Luft and Robert Miller have observed that physician conduct is the element that is managed in managed care.30 In the early stages of the modern managed care movement, MCOs exercised this control through the close utilization management of individual patient treatment decisions made by physicians. As this approach increasingly came under scrutiny, companies moved to more structural strategies, emphasizing practice guidelines, disease management, case management, and pharmaceutical restrictions.31 Despite the movement away from close management, managed care focuses on the basic issue of physician practice style and essentially seeks to minimize the frequency of individual physician judgment in favor of greater levels of standardization. Proponents of this effort to move toward more standardized approaches to medicine can justifiably point to studies by Wennberg and others documenting the astonishing breadth of medical judgment in the absence of physical or other characteristics to explain these differences.32

PUBLIC HEALTH IN A MANAGED CARE CONTEXT

The core functions of public health33 (assessment, assurance, and policy development34) not only remain valid in a managed care era, but may in fact grow in importance in the modern health-care environment. This is because the ability to measure the health of a population over time and adjust resources to meet evidence-based needs - a basic goal of public health - also is essential to the success of the managed care enterprise. Viewed in this context, the successful execution of the core functions of public health can be said to be consistent with the managed care enterprise. Managed care may best succeed when evidence on the health of a population is available and timely, thereby allowing, to the maximum extent possible, the calibration of health resources (in both amount and availability) to meet population needs.

At the same time, however, fundamental differences exist between the duties of public health agencies and those of managed care companies. These structural issues are shaped by legal/jurisdictional, financial, and traditional worldview considerations.

Legal/jurisdictional differences

A public health agency's jurisdiction extends to the entire community that the agency is authorized to serve. Public health agencies have a social compact with their communities as well as a legal duty to serve the community at large; however, no individual within the community has a legally enforceable entitlement to population-based public health services. For example, communicable disease control and surveillance must be accomplished without regard to a particular individual's eligibility for Medicaid or any other form of insurance. Every member of the community, insured or not, "belongs" to public health, and public health agencies must attempt to maximize their resources on the community's behalf.

In contrast, MCOs possess very different duties. As fiduciaries, managed care entities owe a duty to their sponsors to restrict expenditures on members and to hold expenditures to preset premiums or, in the case of self-insured plans, capitation payments. Investments whose payments extend beyond the period of the contract may place the enterprise at major risk for losses. This problem is further magnified by the fact that unlike residents of a public health agency's service area, MCO enrollees have a legally enforceable right to coverage for the defined benefits in their contracts. This entitlement further complicates the power of MCOs to divert resources away from expressly covered medical benefits and into broad public health clinical and administrative investments, regardless of their contractual status.

At some point, the obligation to serve members properly may require that MCOs engage in services and activities that may also have the effect of benefiting nonmembers. MCOs also may elect to engage in certain community-wide service activities, and anecdotal evidence suggests that like other health-care providers, MCOs frequently are actively involved in numerous community-wide programs. Nonetheless, the duty of an MCO is defined by those members who have a legal entitlement to coverage and care, while the duty of public health agencies is defined by their community jurisdiction.

Financial considerations

As noted earlier, MCOs operate on a financial risk basis they sign contracts that require them to provide defined contractual services to enrollees for a fixed fee (typically paid monthly). Thus, for example, an MCO that contracts to furnish certain services cannot arbitrarily discontinue coverage for certain services (e.g., childhood immunizations or drugs) during the term of its contract. This, of course, does not mean that an MCO cannot institute rationing procedures to slow consumption or seek to interpret its contract to reduce the scope and extent of its legal obligations. But regardless of their ability to control resource consumption, MCOs are bound to live up to their coverage contracts.

Public health agencies, on the other hand, typically manage costs within global budgets, as supported by state, federal, and local categorical grants, as well as third-party payments generated by participation in state and private insurance programs, especially Medicaid. Because no individual is legally entitled to certain defined benefits offered by public health agencies, an agency typically has the legal power to reduce or eliminate services and activities if funds run out during a budget year.

Because public health agencies do not have legally enforceable duties to individuals, they also have greater latitude to commingle funds and engage in cross-subsidization practices in order to keep their basic activities afloat. Thus, for example, a public health agency may pool revenues derived from grants, contracts, patient fees, and third-party payments (most typically Medicaid) to support the provision of subsidized personal health-care activities for the uninsured. In this way, shortages in one area can be compensated for via budgetary reallocations where not prohibited by law. Because grant and contract funding for public health activities tends to be modest, and because a large proportion of the patient population is poor, third-party revenues, especially Medicaid, take on crucial importance.

Differences in worldviews and perspectives

Differences in the traditional worldview perspectives of public health and managed care present complex challenges for understanding and collaboration. Managed care combines health-care delivery with the financial and structural principles of insurance, and managed care companies focus on their members rather than the entire community population. Meeting the needs of members over the time period of the contract and within the constraints of premium or capitation payments, while still achieving an adequate profit margin or return on investment, causes MCOs to focus intensively on short-range timeframes. Public health, by contrast, takes a longer view of improving community health, which may take many months, or even years, to achieve. Public health agencies must also be equipped to respond rapidly to disease outbreaks with short-term dedication of labor- and resourceintensive efforts to contain the spread of a particular disease. MCOs are an outgrowth of the world of employment-based health insurance. They gear their operations and activities to relatively healthy, relatively easy-to-manage patients. Public health agencies frequently specialize in the care, management, and oversight of complex patients with public insurance or other sources of public financing who present management challenges that include the provision of social supports to ensure completion of treatment (e.g., transportation, translation, "cultural competency" capacity). A key question that is fundamental to any discussion of the possibility of public health and managed care collaboration, therefore, is the extent to which each domain is aware of the other's perspectives and traditions.

The realities of managed care can put MCOs into conflict with public health agencies in a number of respects. First, managed care companies may alter existing healthcare delivery systems through their contractual network arrangements in ways that interrupt previously established relationships between public health agencies and providers of health care. MCOs may shift members away from clinical care arrangements that either are part of or that work in collaboration with public health agencies and into other systems that do not share public health traditions. The shift away from "health-care safety net" providers, such as publicly managed maternity clinics, in favor of private health providers represents an example of this trend. Not only is the provider eliminated from the network, but the insurance funds that might have helped subsidize care for uninsured maternity patients are lost.35

Second, in altering health-care delivery arrangements and in establishing ownership over certain purchased services, MCOs may disrupt access to certain health-care data on which public health agencies historically have depended. As health care is purchased, the information generated by the care falls within the scope of the purchasing agreement. Such information may become inaccessible in the absence of special laws regulating disclosure. An example of this phenomenon is the tendency of MCOs to use out-of-state clinical laboratories in lieu of in-state public health laboratories.36 Not only are the in-state labs cut out of the health-care (and health-care financing) loop, but their access to specimens for the purpose of secondary public health and epidemiological analysis may be lost.

Third, managed care entities may establish standards of treatment that differ from those recommended by public health agencies. The remainder of this article focuses on this important effect of managed care on public health.

PUBLIC HEALTH AND THE STANDARD OF CARE: TREATMENT GUIDELINES

From a legal point of view, treatment guidelines are the most significant effect of managed care on the management of medical care. Without knowing anything more about them, one would imagine them to be legally non-binding guides to treatment, accompanied by financial and other incentives to persuade practitioners to adopt them. However, recent evidence from a judicial decision related to employer plan coverage and medical liability indicates that treatment guidelines may have moved to a new legal level of absolute contractual limitations on treatment itself.37 As such, the guidelines may leave no room for variation in the choice of what is considered contractually permissible, even within the broad classes of benefits that may be enumerated within a coverage contract.

The power of practice guidelines to actually set the contractual standard of care has been recognized by leading experts in managed care such as Dr. David Eddy, who has written:

Coverage criteria [in insurance plans] constitute a contract between health plans and their members on how the members' money will be spent.... [They function] to ensure that plans do not waste the members' money on non-medical, ineffective, or harmful practices.... A second purpose that evolved over the last two decades is to improve quality.... [G]aps in knowledge [about the effectiveness of medical practices] exist because practices that provide some hope of benefit are disseminated before the ... actual benefit can be confirmed through clinical research.... The best way to correct this problem is to insist on good evidence of effectiveness before allowing a practice to be disseminated. Because coverage criteria sit astride the flow of money, they are in an excellent position to do this.... [C]overage criteria help plans achieve the seemingly contradictory objectives of controlling costs while simultaneously increasing quality.38

Other experts have written on the advisability of elevating practice guidelines to a level at which they no longer function as guides to treatment but as an actual articulation of the limits of a contractual health-care undertaking itself.39

Such a vast elevation in the status of clinical treatment guidelines from advisory to binding legal limits on treatment, of course, raises major issues regarding the quality of the guidelines themselves and the manner in which they are developed and applied. The potential for guidelines to actually lower the standard of care beneath what is considered clinically acceptable and to leave patients without recourse to challenge can be seen in a recent decision from the U.S. Court of Appeals for the Tenth Circuit.

In Jones v. Kodak Medical Assistance Plan,40 the court treated certain alcoholism treatment guidelines as a matter of basic contract design, and thus completely non-reviewable under an individual appeal by a plan member. The member had been denied a particular form of alcoholism treatment in favor of a treatment procedure that was incorporated directly into the plan documents as part of the plan's contract of coverage. Like many other persons with employersponsored coverage, the insured sought to appeal the plan's medical necessity denial and to argue for another form of treatment. The court did not merely reject her arguments. It characterized her case as non-justiciable (even though there was evidence that the plan administrator had determined that the treatment was inappropriate to the member's particular condition) because as part of the contract itself, the guidelines became part of the plan design and thus non-- challengeable.41

Because health plan contracting practices are considered proprietary, they are extremely difficult to measure, and litigation becomes the means by which contracting trends come to light. To the extent that the employer-sponsored health plan practices in Jones in fact signal a trend toward contractual treatment and a contractual standard of care, the health system may indeed be evolving into one in which insurance coverage is used not merely to establish coverage design, but to actually establish the clinical standard of care. In this event, the use of practice guidelines takes on heightened importance (to put it mildly), since in combination with network selection and compensation techniques the guidelines become the industry standard of care.42

The nascent emergence of fixed treatment guidelines as a determinant of the clinical treatment of a population holds major implications for public health practice and policy. Public health policy is aimed at containing, controlling, and minimizing broad public health threats. Some of these threats are addressed through population-wide initiatives, such as efforts to promote water and air quality safety; these types of interventions transcend personal medical care to any individual. Other interventions turn on the ability to assure that personal medical care services are both available and performed in a manner that comports with public health standards of quality and appropriateness.43 Examples of public health goals reached through medical care are the earliest possible diagnosis and complete treatment of communicable disease, the prevention of disease through immunization, and the prevention of premature death and disability through early intervention and management. To this end, the Centers for Disease Control and Prevention (CDC), through numerous scientific advisory groups, has developed scientific guidelines for the prevention, treatment, and control of communicable diseases as well as chronic diseases with broad public health implications, such as asthma and diabetes.44

The modern managed care movement, with its use of treatment guidelines, offers public health authorities unparalleled opportunities to disseminate scientific standards to the medical community with unusual speed and power. Indeed, one of the most troubling problems with medical quality prior to the advent of managed care was the absence of any means for decisively moving toward evidence-based standards of care that would lessen the risk of unjustifiable variations in practice style. In this respect, managed care represents a potentially great advance in the techniques for adopting healthcare standards.

At the same time, the dangers are also equally apparent. To the extent that managed care entities turn to science to calibrate treatment and use treatment guidelines with due regard for the need to make individual variations when the facts of particular patients' cases warrant alternative approaches, the evolution is positive. But to the extent that the guidelines incorporated into a contract are scientifically unsound in either structure or application and operate to withdraw all treatment other than that which is contractually specified, the results can be a lowering of the standard of care rather than its improvement. Courts have begun to recognize this result in managed care corporate liability cases.45 Indeed, eliminating all forms of covered treatment other than that enumerated in a specific guideline would reduce an MCO's contractual obligation to zero in any instance in which a particular guideline's treatment was inappropriate for a member due to underlying complications such as a co-occurring condition. Depending on how the contract was written, rather than defaulting in coverage to the medical judgment of the physician and the plan, the contract would effectively default to a complete absence of treatment.

Although malpractice liability actions against a provider or an MCO may be available for patients harmed by substandard care (whether or not delivered pursuant to practice guidelines), these actions provide recourse only after the fact of injury.46 Moreover, malpractice actions do not address the fundamental coverage design issues raised by the use of treatment guidelines as a contractual limitation of coverage.47 It remains to be seen whether future litigation will confirm or reject the approach outlined in Jones.

The potential for inappropriate guidelines or for guidelines to be used in ways that create medical treatment vacuums is considerable, however. Despite the plethora of treatment guidelines, there are relatively few in relation to the entire body of medical care. There are even fewer that can be said to have been scientifically developed (i.e., those grounded in the results of valid research rather than actuarial estimates). The number of usable guidelines shrinks to almost zero if even the best guidelines are used irrebuttably and without consideration of underlying patient factors that can render even the strongest guideline utterly irrelevant. For example, the use of the routine childhood immunization guidelines established by the CDC Advisory Committee on Immunization Practices (ACIP) is inappropriate where a child has certain immune system-related health conditions.

There are few studies of the scientific soundness or application of managed care industry treatment guidelines. What is apparent is that despite their availability, CDC scientific guidelines appear to be seldom used. One recent review of all Medicaid managed care contracts conducted for the CDC revealed that fewer than 10 percent specify adult immunization in accordance with ACIP standards as a basic duty of care for contractors, and fewer than half incorporate the ACIP standard of care in the area of pediatric immunizations.48

In another study, which focused on managed care plan adherence to public health standards, researchers surveyed Medicaid-participating managed care entities for their compliance with CDC assessment and treatment guidelines in the area of sexually transmitted disease prevention, treatment, and management.49 The researchers found that MCOs overwhelmingly failed to follow the CDC practices or even recommend them for their primary care physicians.50 The reasons given by the MCOs for not using or recommending the CDC standards included cost, legal liability, conflicts with networks, and a desire to give network physicians autonomy (a striking finding in light of the growing emphasis on guidelines in managed care as a means of contractually limiting coverage itself).51 Most importantly perhaps, and consistent with their primary adherence to the time periods of contracts, MCOs noted the low priority they placed on upgrading preventive health services given the high rate of turnover in Medicaid enrollees.52

The fact that so little is known about treatment guidelines and managed care (other than a few isolated studies and court decisions) is extraordinary given their importance in health quality. The Institute of Medicine (IOM), which has studied guidelines, defines treatment guidelines as "systematically developed statements to assist practitioner and patient decisions about appropriate health care for specific clinical circumstances."53 The IOM also has identified certain prerequisites to their use, including the credibility of the development process, their scientific grounding, their development through a multidisciplinary approach, and their ability to be "specific, comprehensive and yet flexible enough to be useful in the varied settings and circumstances of everyday medical practice."54 Most importantly perhaps, in the IOM's view, guidelines should "specify what information about the clinical problem, the patient's circumstances and preferences, and the delivery setting should be recorded to permit later evaluation of the appropriateness of care."55

Despite the criteria for the development and use of treatment guidelines established by the IOM, the practice of structuring managed care through guidelines remains basically unstudied and unregulated. No state appears to have established minimum criteria for either the adoption of guidelines or their application to individual treatment decisions; there are no laws setting up minimum conditions before a guideline can be incorporated into a contract of insurance as a fixed standard of care. State laws enacted in recent years to permit independent review of MCO treatment decisions do not address the evidentiary weight to be given treatment guidelines, nor do they address the power of an independent review organization (IRO) to set aside a decision of a plan when otherwise covered treatment is limited via a practice guideline to one particular type of medical intervention.

Similarly, federal managed care quality legislation basically does not address this issue. Both the House and Senate bills passed in the summer of 2001 56 prescribe a federal independent review system and provide broad evidentiary standards for the conduct of external reviews. In addition, both measures establish certain basic patient "rights" that generally focus on emergency care, access to certain covered treatments and network providers, and coverage for treatment furnished as part of a clinical trial. Neither bill sets standards for measuring when a treatment guideline can be directly incorporated into an employer-sponsored health plan, as in the Jones case, nor does either bill limit how the guideline can be applied. Both bills potentially allow members greater latitude to externally challenge the application of a treatment guideline in a case in which the care would be medically inappropriate, but because the measures do not reach the content of coverage itself, neither would permit a hearing officer to override a guideline and authorize other treatment unless it was covered under the contract. Thus, even where a treatment guideline is subject to challenge in an external review, the effects of such a challenge may be to eliminate treatment entirely in the case of a health plan that limits covered treatments for certain conditions to those specified in guidelines.

DISCUSSION

In the American health-care system, the complexities of the relationship between medical care and public health are historic and deeply ingrained. In the early period of the modern era of American medicine, tensions arose from the clash between professionalism on the one hand and the imperative for public accountability on the other. In today's world, tensions flow from the demand for contractual autonomy on the one hand and the need for public accountability on the other. It is not possible to say which set of tensions presents the greater public policy challenge; indeed, Americans prize their independence over all else, whether as professionals or as contractors.

It is difficult to say how the managed care/public health relationship will resolve itself. There are many issues that bear scrutiny in the quest for a public accountability framework, including access to data and information for public health measurement and surveillance purposes,57 and the use of performance measures that incorporate public health goals and objectives, such as the reduction of vaccinepreventable or communicable disease. But one of the most abiding of public health concerns is the extent to which managed care, in moving to a world in which treatment is determined through fixed guidelines, designs its contracts to reflect the standards of prevention, assessment, diagnosis, and treatment that are essential to achieve not only individual health, but the success of broader public health objectives. In the absence of this melding of contractual treatment and public health concerns, the goals of public health will remain extra-contractual at best and dependent on supplemental sources of health-care financing, which are increasingly difficult to secure.

From a public health perspective, policymakers have two concerns regarding treatment guidelines. The first is the soundness of a guideline itself; the second is the soundness of its application. Guidelines that do not meet minimum standards for science have no place in the medical care system, whether used to guide or determine treatment. In this regard, the IOM's recommendations should be considered carefully. Furthermore, where scientific guidelines have been developed and promulgated by government agencies, managed care plans, like courts,58 should be required to give them great weight, setting them aside only if the plans can prove the guidelines' lack of soundness.

Equally important, however, is guarding against the misapplication of even sound treatment guidelines to cases that do not meet the guidelines' own underlying scientific and practice assumptions. This type of health-care quality danger can be avoided only through individualized determinations based on an evidentiary standard that is designed to consider all relevant and reliable evidence regarding an individual patient.59 Furthermore, in those situations in which an otherwise applicable treatment guideline is considered inappropriate based on the evidence, the "default" standard of treatment must be covered treatment that reflects individualized medical judgment, not no treatment.

Managed care may represent a basic advance in how emerging consensus regarding standards of care is disseminated and applied to the patient population. But the degree to which the advance is valid and not in fact a retrenchment in quality and public health depends on the degree to which public health authorities and policymakers are willing to temper the autonomy of contractual design, a tall order in a market-driven society in which the goal of quality too often takes second chair to the cost of achieving quality. In the end, policymakers must ask the hard question: What good is the nation's unprecedented level of medical expenditures if these expenditures advance only substandard care?