How does increased managed care penetration affect quality of care in the non-managed care sector? Paul L. Herbert, Ph.D., at Mount Sinai School of Medicine used data from the Physician Survey of the CTS and the National Diabetes Cohort to examine whether efforts to monitor the quality of care in managed care organizations (MCOs) have had similar spillover effects on the non-managed care market – particularly for chronic conditions such as diabetes. Specifically, the researchers examined whether: 1) increased managed care market penetration affects the provision of diabetes-specific preventive care to Medicare beneficiaries in the non-managed care sector; and 2) increased managed care market penetration affects the provision of high-cost medical services to Medicare beneficiaries with diabetes in the non-managed care sector. The study also examined whether managed-care-induced changes in health care use have implications for “avoidable” hospitalizations for persons with diabetes. This study better informs policymakers of the system-wide consequences of health care cost-containment policies that encourage expanded use of managed care.