Strengthening the Rural Health Infrastructure

Research Findings

Managed Care & Network Development

This session provided an overview of the latest research findings on the development of health maintenance organizations (HMOs) and health care networks in rural areas. Overall, Dr. Moscovice believes that past obstacles to the availability of HMOs in rural areas are diminishing in importance and that the availability of managed care plans in rural areas is likely to accelerate in the near future.

Though rural enrollment in Medicaid HMOs and prepaid health plans is still low, he said we can expect significant future increases in enrollment and that Medicaid managed care initiatives can be used as a strategy for introducing rural areas to managed care and providing an entree for commercial HMO development.

Right now, for both Medicaid and Medicare, rural enrollment in prepaid health plans is highly concentrated in a few States. In 1995-96, 86 percent of rural Medicaid HMO enrollees were in 5 States (i.e.,Tennessee 43 percent, Washington 13 percent, Oregon 13 percent, Hawaii 8 percent, Arizona 8 percent), which have made a major push to get their enrollees in to prepaid plans; 85 percent of Medicare risk plan enrollees are in 7 States, all of which are generally considered to have more mature managed care markets (i.e., Washington 21 percent, Arizona 15 percent, Oregon 14 percent, Florida 11 percent, California 8 percent, Pennsylvania 10 percent, Hawaii 6 percent).

Dr. Moscovice suggested that the primary purpose of networks is to get hospitals, physicians, and others together cooperatively so that they can compete in today's health care market, maintain access to local service where it's available, and provide access to services that cannot be provided locally.

After reviewing research findings on network development, he concluded that, in general, rural health networks are:

• Developing primarily in rural areas near urban centers, rather than in the more isolated areas.
• Reasonably self-sufficient.
• Not highly integrated clinically or functionally.
• Concerned about antitrust liability but not to the point of affecting operations or plans of most networks.
• Interested, but not yet contracting with HMOs.

References

Casey MM, Wellever A, Moscovice I. Rural Health Network Development: Public Policy Issues and State Initiatives. Journal of Health Politics, Policy and Law February 1997;22(1):23-47.

Moscovice I, Casey M, Krein S. Rural Managed Care: Patterns & Prospects. Minneapolis, MN: Rural Health Research Center, Division of Health Services Research and Policy, University of Minnesota, Minneapolis, April 1997.

Moscovice I, Wellever A, Krein S. Rural Health Networks: Forms & Functions. Minneapolis, MN: Rural Health Research Center, Division of Health Services Research and Policy, University of Minnesota, Minneapolis, September 1997.

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