In the United States, managed care is becoming an increasingly popular method of

Question

In the United States, managed care is becoming an increasingly popular method of administering healthcare. It influences the clinical behavior of providers, as it combines the payment and delivery of healthcare into a single system, the purpose of which is to control the cost, quality, and access of healthcare services for a single bracket of health plan enrollees (Scutchfield, Lee, & Patton, 1997). Yet, managed care often evokes strong or negative reactions from healthcare providers because they are paid a fixed amount for treating their patients, regardless of the actual cost, which may influence their level of efficiency. This can challenge the relationships between doctors and patients (Claxton, Rae, Panchal, Damico, & Lundy, 2012; Sekhri, 2000). Research managed care's inception and study some examples. Be sure to investigate the perspectives about managed care from the vantage of both healthcare providers and patients. You can use the following keywords for your research—United States managed care, history of managed care, and managed care timeline. Based on your research, answer the following questions: Summarize the history of when, how, and why managed care was developed. Define and discuss each type of managed care organization (MCO)—health maintenance organization (HMO), preferred provider organization (PPO), and point of sale (POS). Explain the positive and negative aspects, respectively, of managed care organization from the provider's point of view—a physician and a healthcare facility—and from a patient's point of view. Explain the three types of incentives for providers for efficiency in the delivery of healthcare services. Explain who bears the financial risk—the provider, the patient, or the managed care organization. Offer your recommendations, to accept or decline, for patients considering managed care health plans, with your rationale for each.

Explanation / Answer

Managed Health Care in united states is basically the type of health insurance and system of providing health care services at minimum cost.

History of Managed Care

The managed care in the United States started in the late 19th century, when a group of physicians from different United States Cities began providing prepaid medical care services to different associations of workers. Under this program each member of a participating association paid a small annual fee to the physician and in return gained unlimited access to the health care services from the physicians. In the early 20th century, this began with railroad, mining, and lumber companies started organizing their own medical services or contracted with medical groups to maanged care services for their workers. During the time of Great Depression in 1930s, this service of prepaid contracts became common between employers and employee associations. In 1970s, the federal government including some big private players boosting their employees to join prepaid health care groups. Despite this encouragement, however, prepaid group practice grew slowly. In the mid-1980s, employers increasingly turned to managed care to contain the spiraling cost of providing health care benefits to workers. During the 1990s, managed care enrollments soared. Today, the vast majority of privately insured Americans, and a sizable fraction of those in the government-sponsored Medicare and Medicaid programs, are covered by some form of managed care.

Managed Care Organizations

Managed care services in United States is provided by three basic types of health care organizations: health maintenance organizations (HMOs), preferred provider organizations (PPOs) or Point of Service (POS). These organizations use a variety of methods of financing and organizing the delivery of health care to control costs. Managed care depends on three important strategies: selective contracting, innovative economic incentives, and utilization review.

Preferred provider organization (PPO) and its variants. In this form of managed care, the insurance company contracts with a select group of providers to reimburse them on a discounted fee-for-service basis. For providers to be willing to accept the discount, they want the list of participants limited, assuring them of increased patient volume and prompt payment. In turn, patients are limited to providers on the list, in exchange for care without out-of-pocket expenses for the full amount of the discounted bill. If the patient decides to use a provider outside the contracted panel the insurance company pays a limited amount to that provider, with the patient responsible for the balance. In 1995,1001 PPO plans were operating in the United States, with
79.6 million enrollees.

A variant of the PPO is the exclusive provider organization (EPO). In this arrangement the insurance company will not pay anything to a non-contracted provider. This clearly provides
additional incentive for the patient to use a contracted provider. It also provides an incentive for the provider to more deeply discount his or her rate. In some plans, renewal of provider contracts is conditioned upon 'racheting down' expectations of cost or performance. In 1995, 310 EPO plans were operating in the United States, with 4.6 million enrollees.

Unlike PPOs, EPOs or fee-for-service with utilization controls, true managed care is provided in Health Maintenance Organizations (HMOs). As a result of consolidation, the
number of operating HMOs in the United States has recently declined; however, enrollment has grown from 26.6 million in 1986 to 67.6 million in 1995.3 HMO penetration has reached
25.7 per cent in 1995, the highest level ever.

HMOs involve a prepaid premium, a limited panel of providers and the assumption of financial risk by providers of care. That is, if resource use is lower than the amount paid in
premiums, the remaining funds go to the provider to reward their parsimony. If, however, resource utilization exceeds the prepaid amount, then the provider is at risk for covering that overage. As a practical matter, most health plans and providers have what is called 'stop loss insurance', a reinsurance pool which limits the potential losses of the plan and/or the provider. There are a variety of HMO models that are currently operating in the United States. These include the following types. The Group Model is an HMO where the plan has an exclusive contract with one group of physicians, and the group in turn has an exclusive contract with the plan. Kaiser Permanente is the classic example. The Kaiser Foundation Health Plan contracts with only one physician provider, the Permanente Medical Group, which sees only patients of Kaiser Foundation Health Plan.

In a Staff Model HMO, the physicians are all employees of the plan. The classic example is Puget Sound Cooperative in the Northwest United States. These HMOs are frequently not-for profit organizations that have a consumer board that governs their activities. Usually staff model physicians are employees paid a salary and, frequently, a bonus based upon performance.

A variant is the Point of Service (POS) or open-ended option. In this arrangement, the patient or their employer pays a higher premium. The patient has a choice and may also visit a provider outside the plan, but would pay a larger copay or deductible for that visit. Point of Service plans are particularly attractive to individuals who do not have experience with managed care and want the assurance that they can select any physician or hospital. Satisfied participants frequently move from the POS to other managed care options. In 1995, an estimated 13.5 million enrollees had access to POS plans. In addition, over one-half of all HMOs offer a variety of standalone specialty programmes in areas including dental, vision, psychiatric and prescription drug services.

Positive and Negative Impacts of managed health care.

Managed care tends to decrease or eliminate individuals’ incentives to overuse services. It generally reduces patient out-of-pocket expenses and other financial barriers to health care. Managed care also has the potential to achieve better coordination of patient services. Given that most managed care organizations use the primary care physician to direct and structure the patient’s total treatment, in theory the services provided should be more logical, customized, and prompt than they would be under other systems. Managed care, through its use of internal computer information systems, also has the potential to monitor the quality of care and assess the performance of both individual patients and their physicians more efficiently. Finally, some managed care organizations provide transportation services for patients between their homes and the facilities where they receive care. These services may be vital for patients with major disabilities, especially those who live in areas without any public transportation.

Managed care, however, also poses a number of formidable problems. For example, managed care organizations may design and direct their marketing programs to attract only generally healthy populations. They may overtly and covertly discourage enrollment of individuals who are likely to be users of costly health care services. Because patients with disabilities and chronic disease may be frequent users of specialists and other high-cost medical services, managed care organizations may view them as undesirable patients. In addition, managed care organizations typically use primary care physicians as “gatekeepers” to control access to care. These physicians may not have the necessary experience or expertise to address the unique needs of people with diverse physical and mental disabilities.

With their emphasis on primary care and cost containment, managed care organizations may not provide people with disabilities, chronic disease, or psychological trauma adequate access to needed specialists who are qualified to diagnose and treat their conditions. For example, managed care organizations may stop referrals to psychiatrists, who tend to provide more comprehensive treatment than other mental health professionals. In addition, the complexity of managed care organizations’ referral procedures and complaint and grievance processes, and the materials that describe these aspects of managed care, may create tremendous barriers for individuals with cognitive or learning disabilities. Because managed care organizations deal primarily with the needs of healthy people, they may use definitions of “medical necessity” that work against some individuals. For example, they may apply criteria that call for “substantial improvement” or “restoration of function” as conditions for the authorization of treatment, medication, or medical equipment. This may discriminate against individuals with certain types of physical or mental disabilities who cannot meet these standards.

Managed care organizations also may have narrow short-term business perspectives that ultimately result in decisions that harm patients. Because many of these organizations operate on a for-profit basis and so must generate an appropriate return on equity to their owners or shareholders, administrators may be under great pressure to hold down short-run costs. To do so, they may deny patients access to ongoing ancillary services, such as speech, physical, and occupational therapies, or they may withhold costly medical equipment from individuals who need them. These patients may suffer in the long term because of these shortsighted decisions.

Managed care organizations also provide innovative economic incentives to patients and physicians to encourage them to select less costly forms of health care. For example, organizations may require patients to obtain preauthorization before using hospital emergency rooms to receive care for specific conditions. They also may discourage patients from using higher-priced health care institutions such as costly teaching hospitals for routine care. Costs are also regulated by controlling physician salaries, which may be fixed initially and later adjusted up or down annually based on performance, rewarding those physicians who contain costs and punishing those who do not.

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