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Selective contracting in California: early effects and policy implications.

L Johns, R A Derzon, M D Anderson

    Inquiry : a Journal of Medical Care Organization, Provision and Financing
    |January 1, 1985
    PubMed
    Summary
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    California's Medicaid program and private insurers are successfully negotiating provider prices, showing favorable contracts and no reduction in care quality. This initiative saved the state $165 million in its first year.

    Area of Science:

    • Health Policy
    • Healthcare Economics
    • State Government Health Programs

    Background:

    • California pioneered state-level negotiation for healthcare service prices.
    • Medicaid programs and private insurers engaged in price negotiations with providers.

    Purpose of the Study:

    • To evaluate the initial impact of California's provider price negotiation.
    • To assess challenges and successes in both Medicaid and private sector contracting.

    Main Methods:

    • Analysis of a two-year study on contracting outcomes.
    • Examination of hospital contracts, patient/physician distribution, and care quality indicators.

    Main Results:

    • Medicaid contracting yielded favorable prices for the state, with minimal patient or physician dislocation.

    Related Experiment Videos

  • No evidence of decreased quality of care was observed in the Medicaid program.
  • State savings reached an estimated $165 million in the first program year.
  • Private sector selective contracting faced unforeseen barriers and progressed slower than expected.

    • Conclusions:

    • California's approach to provider price negotiation in Medicaid proved effective and financially beneficial.
    • The study highlights the potential for state-led initiatives in healthcare cost containment.
    • Barriers to selective contracting in the private sector require further investigation.