13,000 patients with five different diseases: arthritis, asthma, ulcers, hypertension, and otitis media. The findings, published in the American Journal of Managed Care in March 1996, revealed that during a 12-month period, patients with these conditions had more than 99,000 office visits, incurred almost 500 emergency department visits and more than 1,000 hospitalizations, and used more than 240,000 different prescriptions (Horn et al., 1996). The 12-month study also examined practical cost-containment practices believed to have no negative repercussions on the quality of health care. These included greater control of second-opinion requirements, increased rigidity of gatekeepers and case managers, implementation of drug and physician office visit copayment levels, greater use of generic drugs, and greater limitation on formularies (defined as the percentage of FDA-approved drugs for a specific condition included in a provider's formulary and not requiring physician approval before generic prescription drugs are dispensed).

The ICOR study also controlled for patient variables to determine rates of health care utilization and treatment outcomes. The study confirmed that severely and acutely ill patients tend to consume more medical services. Findings also showed that visits to many different health care providers over the course of a year are associated with increased rates of utilization of health care services, along with increased rates of drug use, hospitalizations, and emergency hospital visits. After controlling for severity of illness and other confounding variables, the study found that for every condition (except otitis media), increased formulary restrictions were associated with increased numbers of physician office visits, emergency department visits, hospitalizations, and prescriptions and an increased cost of prescriptions over a 12-month period.

The methods used in the ICOR study to measure severity of illness include patient factors and their conditions, as well as the patient's physiologic symptoms and psychosocial characteristics. By controlling for differences in severity of illness among patients, data can be analyzed to determine which management strategies, interventions, and medications are most appropriate to provide better treatment outcomes. These methods are being implemented in many places—managed care settings, hospitals, long-term-care facilities, and ambulatory-care settings—in an effort to determine how to improve outcomes on the basis of patients' needs. This methodology also encourages health care systems to practice beyond their standard operating procedures and allows patient conditions to be identified more readily. The traditional method of using diagnostic codes, on the other hand, provides only a vague description of symptoms. If managed care systems use a more accurate picture of a patient's condition, physicians in these settings can become more knowledgeable about a patient's ailment and, therefore, can be better prepared to treat the disease.

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