The decision to cover a procedure at HMOs: Who makes the call?

A model is developed in which medical directors at health maintenance organizations (HMOs) have a most preferred level of responsibility for making decisions about coverage for new procedures. Responsibility that they do not have is shared by decision makers internal to and external to the HMO based on a combination of the medical director's preferences and constraints set by the HMO. Therefore, observations of the division of responsibility are expected to depend on preferences and constraints. We find that variation in constraints imposed by HMOs, but not variation in medical directors' preferences, influences the division of decision making authority between medical directors, others internal to the HMO, and decision makers external to the HMO.