Competition on quality in managed care

There is intense competition between managed care organizations (MCOs) in the USA based on cost and benefit coverage, but scant attention to differences in quality. Consumer preference for 'choice' has stimulated the growth of overlapping networks of providers across competing MCOs. These networks have tended to perform less well on the quality indicators in report cards than staff model MCOs. Ideally one would measure individual provider performance; but the overlapping networks, and the fact that each MCO represents a small fraction of each provider's practice, make that difficult to do. MCOs could potentially collaborate to measure individual provider performance. Financial incentives and risk-adjusted premiums might stimulate competition on quality within MCOs. It seems more likely that true competition on quality will occur between groups of providers, organized or integrated delivery systems, than between MCOs. Nevertheless, MCOs are likely to offer some quality-improving programs directly to their members, and can stimulate the competition between providers by collaborating to obtain provider-specific measurements.