Proportion of U.S. Physicians Without Any Managed Care Contracts Ticks Up

No Physician Exodus from Managed Care Networks, But Trend Could Portend Greater Cost and Access Problems for Patients

News Release
May 4, 2006

FURTHER INFORMATION, CONTACT:
Alwyn Cassil (202) 264-3484 or acassil@hschange.org

WASHINGTON, DC—After remaining stable since the mid-1990s, the proportion of U.S. physicians without any managed care contracts rose from 9.2 percent in 2000-01 to 11.5 percent in 2004-05, according to a national study released today by the Center for Studying Health System Change (HSC).

Compared with physicians with one or more managed care contracts, physicians without managed care contracts are more likely to have practiced for more than 20 years, work part time, lack board certification, practice solo or in two-physician groups, and live in the western United States, the study found.

"While physicians have not dropped out of managed care networks in large numbers, this small but statistically significant increase could signal a trend toward greater out-of-pocket costs for patients and a decline in patient access to physicians," said Paul B. Ginsburg, Ph.D., president of HSC, a nonpartisan policy research organization funded principally by The Robert Wood Johnson Foundation.

Options for physicians who do not contract with managed care plans range from seeing only patients covered by insurance products that do not include provider networks (including fee-for-service Medicare), establishing cash-only practices, and serving managed care patients as an out-of-network provider who can balance bill patients for charges beyond insurer reimbursements for out-of-network providers.

"Despite media reports about doctors dropping out of insurance networks because of payment and administrative hassles, the vast majority of physicians continue to contract with managed care plans," said HSC Senior Researcher Ann S. O’Malley, M.D., coauthor of the study with HSC Senior Researcher James D. Reschovsky, Ph.D.

Growth in the percentage of physicians without any managed care contracts may reflect fewer privately insured patients enrolled in health maintenance organizations (HMO) that do not pay for care received from out-of-network providers. At the same time, enrollment in plans that pay some cost of out-of-network care—preferred provider organizations (PPOs) and point of service (POS) plans—grew 13 percentage points between 2000 and 2005, according to the Kaiser Family Foundation. In 2005, more than three-quarters of people with employer health coverage were enrolled in a PPO or POS plan.

Based on HSC’s nationally representative Community Tracking Study Physician Survey, the study’s findings are detailed in a new HSC Tracking Report—No Exodus: Physicians and Managed Care Networks—available here. The 1996-97, 1998-99, 2000-01 surveys contain information on about 12,000 physicians, and the 2004-05 survey includes responses from more than 6,600 physicians. Response rates for the surveys range from 52 percent to 65 percent.

The study also found substantial variation in the proportion of physicians without managed care contracts across communities, suggesting that local market conditions influence decisions to contract with managed care plans.

Other key study findings include:

• Physicians who are not board certified in their specialty—only 11 percent of all physicians—are half as likely to contract with managed care plans compared with board-certified physicians, suggesting that not meeting health plan credentialing requirements is a factor. Among physicians with managed care contracts, 8 percent lack certification, while among physicians with no managed care contracts, 16 percent lack certification.
• Physicians in solo or two-physician practices are less likely to contract with managed care plans, perhaps reflecting their higher costs and difficulties in handling administrative burdens. Larger group practices and institutional-based practices (i.e. medical schools or hospitals) more likely can invest in the administrative infrastructure needed to deal with health plan claims processing and clinical oversight.
• Physicians in practice for more than 20 years are less likely to contract with managed care plans than those in practice for 10 years or less, suggesting that older, experienced physicians may have developed the patient base and reputation that better allows them to practice without managed care contracts. About 23 percent of physicians in solo/two-physician practices who are older than 60—7 percent of all physicians—do not contract with managed care.
• The increase in the percentage of physicians without a managed care contract also occurred across most physician specialties. Generally the increase was small, with one exception: obstetrician-gynecologists. In this specialty, the percentage with no managed care contracts tripled to 11.8 percent in 2004-05, after remaining stable since 1996-97 at about 3.5 percent.
• Psychiatry has long been a specialty with the largest proportion of physicians without managed care contracts. In 2005, 35 percent of psychiatrists did not contract with managed care. This likely reflects both low reimbursements and the greater utilization management from health plans and managed behavioral health companies that many psychiatrists face. It also may reflect shortages of psychiatrists in many areas.

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The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded principally by The Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.