Changes in Drug Payment and Management Strategies in Physician Organization

How do changes in payment methods for drug costs affect drug use management, and what are the potential effects of these changes on quality and costs of care? Researchers at the University of California, San Francisco conducted a series of case studies examining changes in payment methods for prescription drugs. They 1) described drug risk-sharing arrangements between HMOs and physician organizations; and 2) developed and refined hypotheses and generated preliminary findings about the relationships between physician organization risk bearing for drug costs, adoption of innovations in managing drug utilization, and the potential effects of these on quality and costs of care. The investigators analyzed whether HMOs retain control of some core pharmacy functions, including rebate contracting with drug manufacturers and formulary management, and if so, whether retention of such functions serves as an impediment to drug management innovation or as a barrier to changing physicians’ prescribing practices. They also examined whether physician organization risk bearing for drug costs leads to a preoccupation with interventions designed primarily to decrease drug budgets. The objective of this study was to better inform private and public policymakers as they strive to set appropriate standards for and monitor the effects of various strategies to pay for and manage drug costs.