Applications of QOL Measurements: A Managed Care Perspective

Oncology, ONCOLOGY Vol 9 No 11, Volume 9, Issue 11

The current application of QOL measurements and outcomes in managed care organizations is minimal, but potential applications are significant, since a fundamental goal of managed care is to optimize member/patient

The current application of QOL measurements and outcomes in managed care organizations is minimal, but potential applications are significant, since a fundamental goal of managed care is to optimize member/patient health, well-being, and satisfaction with efficient resource use. The challenge for researchers and clinicians in this field is to demonstrate the validity and value of a select number of instruments and to galvanize practicing physicians to put them to use in their practices. Managed care organizations would then use their influence over providers, including contract requirements and economic incentives, as well as their internal resources for data collection, analysis, and reporting, to push broader application and dissemination of QOL instruments.


The application of quality of life (QOL) measurements, as identified and defined by other articles in this supplement, has little current significance for the vast majority of managed care organizations. Without demonstrated effectiveness of these measurements in real world clinical settings, managed care organizations will not require their application in contracts or provide incentives for their use.

Several well-established staff or group model Health Maintenance Organizations (HMOs) with ties to academic medical centers or involvement in health services research are formally involved in application and evaluation of QOL instruments. The challenge for those academicians and clinicians who believe that use of QOL measurements can lead to improvement in patient well-being and outcomes is to reach a consensus on a set of valid instruments and to convincingly demonstrate the cost effectiveness or cost utility of those instruments.

Challenges Facing Managed Care Organizations

Purchasers of health care benefits, both public and private, are demanding that the aggregate costs increase at a rate no greater than general inflation. In several competitive markets with high levels of managed care penetration, the price paid by some group purchasers (eg, California Employees Public Retirement System) for HMO coverage for employees and/or retirees has actually declined.

Concomitantly, group purchasers of health care, and the individuals who then make a selection from among two or more choices of insurance plans, are evaluating plans based upon a variety of published report cards or rating systems that seek to differentiate plans based on certain aspects of quality of care and service. Examples include the Health Employees Data Information Set [1] (HEDIS 2.5), which provides comparative measures of HMO plans for several primary preventive services, retina examination for diabetics, and rates of low birth weight or very low birth weight infants, and the National Committee for Quality Assurance (NCQA), an HMO accreditation organization [2].

Managed care organizations are being evaluated for their ability both to control health care costs and to provide quality care and service. Thus, plans must devise financial incentives and quality standards for physicians and other providers to achieve both these aims. Insofar as QOL measures in oncology or other disciplines are successful in assisting providers to make better clinical decisions, which take into account patient preferences and lead to greater patient involvement, then managed care organizations will seek out providers or institutions that employ those measures.

Reimbursement Principles

Eddy proposes a set of principles for guiding decision making related to resource allocation for health services [3]. These principles are based on the premise that the financial resources available to provide health services and medical care to populations are limited. If one holds to this premise, as I do, then decisions regarding individual patients cannot be divorced from the broader context of their impact on a particular population being served (eg, a Medicaid program in a particular state or the population covered by one HMO) or on society as a whole.

Accepting this premise also leads to seeking interventions that provide "the greatest good for the greatest number." Approaching resource allocation in this way does not mean that expensive interventions, such as organ transplants, that impact a single individual are rejected. Rather, it amplifies the importance of establishing the benefits, harms, and costs of specific medical interventions.

This process should include patient-focused QOL measurements and rating of outcomes. Armed with this information, as well as other data gathered in clinical trials, clinicians, policy makers, and payers would be better equipped to determine the appropriateness of selected clinical interventions and the subsequent implications for insurance coverage, reimbursement, or investment.


The use of capitation as a mechanism for reimbursing providers for health service is growing steadily. Capitation involves making a fixed payment to an individual provider, a medical group, an institution, or an integrated delivery system, for the provision of all medical services covered under that capitation payment. Typically, the capitation payment is made by a managed care organization to a provider on a per member (patient) per month basis. Other types of capitation involve making a fixed payment to an institution for a particular service (eg, a global payment to an institution for hospital, physician, and ancillary service for a bone marrow transplant that might include all pre- and post-transplant care for 1 year).

With the rise of capitation, medical group practices, independent practice associations, and other provider systems are placed in the position of bearing some of the insurance risk for the cost of medical care and health services for defined populations. This risk-bearing necessitates that providers assume accountability for managing care and resources. Physicians in conjunction with other health care providers should be in the best position to make decisions that maximize the health and well-being of the population they serve while maintaining the long-held tradition of advocacy for the individual patient.

For managed care organizations to serve the interests of their members, they must operate with the best available information, to maximize the patient's quality of life and clinical outcome. As QOL research expands and standard instruments become available, the use of QOL measurements and the involvement of patients with shared decision making based on QOL instruments will become increasingly important to the managed care community.


1. National Committee for Quality Assurance: HEDIS 2.5, Updated Specifications for HEDIS 2.0. Washington, DC, January 1995.

2. National Committee for Quality Assurance: 1994 Reviewers Guidelines for the Standards for Accreditation. Washington, DC, 1994.

3. Eddy DM: Principles for making difficult decisions in difficult times. JAMA 271:1792-1798, 1994.