Three Main Types Of Managed Care Plans example essay topic

There are so many problems with our society's health care. Everyone wants to find a solution, but no one has been able to come up with one yet. Many different things have been tried, but none have put a cease to the exorbitant costs, which most believe to be the main problem. Out of everything tried, the most recent and popular system is known as managed care. Managed care is the most common form of health insurance in the United States, and provides more a cost efficient coverage than paying a fee-for-service charge. However, it is also a very complicated system.

Over the next few pages I am going to try and go over the main parts of the managed care structure. In the end, I am going to decide the strengths and weaknesses of this system, and decide whether or not I think it will be the answer to our system. First I am going to go over exactly what managed care means, as simply as possible. Managed care is an organized approach to delivering a comprehensive array of health care services to a group of enrolled members through efficient management of services needed by the members, and negotiation of prices or payment arrangements with providers. It has two main functions; first it integrates the functions of financing, insurance, delivery, and payment with one organizational setting, and it also exercises formal control over utilization.

Now I am briefly going to go over the history of managed care. Managed care dates back to as early as 1882. Northern Pacific Railroad Beneficial Association was one of the first employers to offer health care coverage. In 1910, the Western Clinic in Tacoma, Washington offered medical services through its providers for a premium of only $. 50 per month, which served lumber mill owners and employees. In 1929, Blue Cross was originated when Baylor Hospital in Texas agreed to provide coverage by the case on a prepaid basis for some 1,500 teachers.

The Kaiser Foundation Health Plan was started in 1937 as well. In 1971, the Nixon Administration announced a new national health strategy, which was the development of health maintenance organizations. The federal government established grant and loan guarantees for HMO's to reach a goal from 30 in 1970 to 1,700 by 1976, enrolling 40 million people, and 90 percent of the population by 1980. The HMO Act of 1973 authorized $375 million in federal funds to help develop HMO's. Although the goals have not yet been met, managed care has continued to grow throughout the past four decades. At the end of 1996, there were over 600 HMO's in operation, enrolling around 65 million members, which is about 1/4 of the population (Tufts 1998).

Before I get into the different types of managed care organizations, I am going to go over some cost control methods in managed care. Managed care organizations are different methods used to control utilization of services. Utilization management requires three things. First, you have to have an expert evaluation of which services are medically necessary in a given case. This ensures that unnecessary services are kept to a minimum. Secondly it requires a determination of how those services can be provided most inexpensively, while maintaining a high level of quality of care.

It also requires a review of the process of care and changes in the patients condition to revise the course of medical treatment if necessary. The methods that are most commonly used for utilization monitoring and control are choice restriction, gate keeping, case management, utilization reviews, and practice profiling. The first method I am going to talk about is choice restriction. Traditional health insurance gave the insured open access to any provider. This led to an over use of services. Most of the managed care plans have some sort of restriction on who, and from where the patient can receive medical care.

Patients can still have a choice of who they see, but their choice is limited to doctors participating in the MCO plan. These doctors are MCO employees, or they have contracts with the MCO. Any doctor who is affiliated with this MCO plan is said to be on a panel. There are two types of panels.

One is a closed-panel, and the other is an open-panel. A closed-panel not does allow its enrollees to see any doctor outside of the panel. If someone wants to see a physician who is not on the panel, then they will have to pay all of the expenses themselves. However, if you are on an open-panel, then you are able to see doctors outside of the panel, but enrollees almost always have to pay a higher out-of-pocket cost. Utilization is better managed under a closed-panel because the MCO has more control of the providers on its panel.

The trade off to lower out-of-pocket costs, is a restriction in which doctors you can see, and this has led to some peoples' dissatisfaction with their health plans. Gate keeping is another method used to control utilization. This is where a primary care physician keeps track of all of an enrollees health care services. Enrollees in the MCO plan choose who they want to be their primary doctor, and this physician becomes the person they contact first when medical assistance is needed. When a patient feels they need help beyond what the primary care giver can provide, they must be referred by their physician.

This means that their primary doctor controls their access to higher levels of medical services. This helps protect patients from unnecessary procedures and over treatment. Case management is like gate keeping, but has added importance when patients have complicated problems, and require a variety of services over a long period of time. An example would be when someone needs secondary or tertiary care more often than they need primary care. In this case, an experienced health care professional would monitor the patients care and determine what care is necessary in the most appropriate, and cost effective setting. A case manager would also be involved in providing the patients family with support and information.

Another method used is utilization review, which is the process of evaluating the appropriateness of services provided. Its main objective is to review each case and determine the most appropriate level of service and the setting in which it should be delivered, the most cost-efficient methods for care delivery, and the need to plan subsequent care. It is divided into three categories which are prospective, concurrent, and retrospective. One example of prospective care is preventing unnecessary or inappropriate institutionalization. It also notifies the concurrent review system that a case will be occurring, and allows them to prepare for discharge planning.

Concurrent utilization review occurs when decisions regarding appropriateness are made during the course of health care utilization. An example of this would involve monitoring the length of inpatient stays and discharge planning. Retrospective utilization is managing utilization after the services have been delivered. The review is based on an examination of medical records to access the appropriateness of care. This can be helpful for taking corrective action and for monitoring subsequent progress.

The last form of utilization control that I am going to talk about is practice profiling. This method refers to the development of provider-specific practice patterns and the comparison of individual practice patterns to some norm. The profiles are basically used to identify which physicians, compared to other physicians in their category, are using surgery, tests, or hospitalization excessively. The profile reports are used to give feedback to providers so that they can modify their behavior of medical practice. They can also help detect fraud and abuse. Now that I have gone over some of the cost control methods of managed care, I am going to begin talking about the different types of managed care.

There are three main factors that led to the development of different types of managed care. The factors are; having the choice to pick your own provider, having different ways to arrange the delivery of service, and payment and risk sharing. These are the main issues that caused different types of managed care plans, and various models of health maintenance organizations. There are three main types of managed care plans. There are health maintenance organizations (HMO's), preferred provider organizations (PPO's), and point-of-service (POS's). Health maintenance organizations were the original form of managed care, preferred provider organizations are the most common, and point-of-service is the least common.

The basic characteristics of these three are the same. Each health insurance company has an established network of providers from which they require or encourage you to seek care. In exchange for using these certain health care providers, your cost is significantly lowered. The differences between each managed care plan is mainly about the degree of compensation you will receive for medical treatment outside of your managed care network. The first managed care plan that I am going to talk about is the health maintenance organization.

This was the most common plan until insurance companies created preferred provider organizations to compete with them. An HMO is different from the other types because it focuses on wellness care, payment in the form of capitation, use of a closed panel, and accountability. For instance, HMO's not only offer medical care when a person is sick, like other traditional health insurance plans, but offer a variety of services to help people maintain their health. They also place a lot of emphasis on preventative services, such as a routine checkup. Also, a fixed fee per member per month provides access to a complete range of health care services. The utilization to these services is mostly maintained by primary care gatekeepers.

In addition, all of a person's health care must be obtained from a doctor, hospital, or other health care professional inside their HMO. Other special services a person may need such as mental health or drug abuse would not apply. Lastly, the HMO is responsible for making sure that its services are being performed according to certain established standards of quality. There are four different HMO models, which are the most common.

They are staff, group, network, and independent practice association models. They differ mostly in their agreements with participating physicians. Not all of the health maintenance organizations fit into these four models because some contain qualities from more than one group. These are called mixed models, and feature many combinations of health care providers. The first model I am going to discuss is the staff model. A staff model employs its own salaried physicians.

These physicians work only for their employer HMO and provide services to that HMO's enrollees. In order to provide all the health care needs of its enrollees, the HMO must make sure and hire physicians from all common specialties. Also, contracts with selected sub specialties are established for those infrequently needed services. The HMO also operates one or more ambulatory care facilities, and in most cases contracts with area hospitals for inpatient services. Some advantages of the staff model are that they can exercise a greater degree of control over their physicians and how they practice so that it is easier to monitor utilization. Also, it is convenient for enrollees because most of the common services are in the same location.

However, some disadvantages are that the fixed salary rate can be high, and enrollees have a limited choice of physicians. This has caused this model to be the least popular. A group model contracts with a multi specialty group practice, and separately with one or more hospitals, to provide its members with comprehensive services. The physicians in a group practice are employed by the group practice, not the HMO, but the HMO generally pays an all-inclusive capitation fee to the group to provide the physician services for its enrollees. This brings a block of business to the group practice, and allows the HMO to have more control over finances and utilization. This however also has the disadvantage of limited physician selection.

When using the network model, the HMO contracts with more than one medical group practice. Usually, this network only contracts with a group practices of primary care physicians, and enrollees can select any physician from this group. Each group is paid a capitation fee based on how many people are enrolled. The group is responsible for providing all physician services.

They can make referrals to specialists, but if they do they are financially responsible for reimbursement. This model is nice because it provides enrollees with a larger choice in physicians, but it also is a disadvantage because utilization control is not optimized. The final model I am going to talk about is the Independent Practice Association or IPA model. This is where the HMO contracts with a physician organization, which, in turn contracts with individual physicians.

The IPA physicians practice in their own offices and continue to see fee-for-service patients. The HMO reimburses the IPA on a capitate d basis. However, the IPA usually reimburses the physicians on a fee-for-service basis. This type of system combines prepayment with the traditional means of delivering health care, and amounts to less direct HMO control over the providers.

Some advantages of an HMO would be low out-of-pocket costs. HMO members pay only a small fixed monthly fee, no matter how much medical care is given in that month. There is also a focus on wellness and preventative care. Also, there is no limit on your lifetime benefits, and the HMO will cover you as long as you are a member. Some disadvantages would be that you have to choose a primary care physician, and if you need or want care from someone or somewhere else, it can be difficult and costly. Now I am going to talk about another type of managed which is the Preferred Provider Organization.

This plan was developed to combine the lower cost of managed care with the greater degree of choice found in traditional health care, and it lies in-between a HMO and a fee-for-service plan. Your health care is still managed, but you are granted with a wider choice in providers. A PPO is like an HMO in the fact that you pay a fixed monthly premium, and in return the health insurance company and its health care network provide basic medical benefits to you. However, the main difference in the HMO and PPO is that in this plan a primary care physician, or gatekeeper is not required.

This means that if you needed to see a specialist, you would not need a referral. If you wanted to go outside of the PPO network, then you can, you just simply would have to pay a higher co-payment than you would if the provider was within the PPO network. Some of the good things about a PPO are obviously the free choice of health care providers, and the fact that out-of-pocket costs are generally limited. One of the downfalls to this plan however is that it is the most expensive type of managed care. Also, there is less coverage for treatment provided by non-PPO physicians.

The final managed care plan that I am going to talk about is the point of service, or POS plan. This is a plan to lower medical costs in exchange for more limited choice. It has characteristics of both previous plans, but it also differs from the two. When you enroll in a POS plan, you must pick a primary care physician to monitor your health care. This doctor must be chosen from within the network, and become your "point of service". The primary physician may then make referrals outside of the network for you, but then only some compensation will be offered by your health insurance company.

If you have a medical visit within the health care network, then the paperwork is completed for you. However, if you choose to go outside of the network, then it is up to you to fill out forms, send bills, and keep your own records. Also, there are no deductibles and usually a minimum co-payment when you stay inside your network. If you use a POS plan, you would have such advantages as maximum freedom of choice, and a minimal co-payment with no deductible.

You also wouldn't need a gatekeeper, and your out-of-pocket expenses would be limited. Some disadvantages would be that you would have a substantial co-payment and deductible for non-network care. It also causes tight controls on getting specialized care, which helps to reduce costs, but can lead to complications if your primary care physician doesn't provide the referral that you need. Now I am going to go over briefly the impact managed care has had on Medicare and Medicaid. In 1982, Medicare recipients were given the option to enroll in a managed care program, or to remain in a fee-for-service plan.

This was called the Tax Equity and Fiscal Responsibility Act or TERRA. Another plan was also introduced, but this one was only for Part B services called the Health Care Prepayment Plan. Under this program, managed care organizations are paid on a cost basis for outpatient and other services covered under Part B. Medicare managed care contracts are usually called risk contracts, and the MCO is responsible for services no matter the extent, expense or degree, for a fixed capitation fee. Also, in 1997 Congress passed the Balanced Budget Act which created the Medicare+Choice program. This program was made to increase Medicare enrollment in managed care programs, and it also reduced payments to HMO's. Medicaid recipients were allowed by states to enroll in a medicaid plan under the Social Security Act, specifically sections 1115 and 1915 (b).

Also, the Balanced Budget Act of 1997 gave states the authority to bring about mandatory managed care programs without requiring federal waivers. In 2001, all states except Alaska and Wyoming had Medicaid recipients enrolled in managed care plans (Douglas 2004). Some MCO's have been leaving Medicaid recently however, because their profits have not been good. As they leave, states have been replacing them with primary care case management. These are like managed care, but the state contracts directly with primary care providers who take care of the medical needs for a certain amount of Medicaid recipients. In this case, payment is a fee-for-service, not by capitation.

Now that I have gone over the managed care system, I am going to talk about some of strengths and weaknesses I feel managed care organizations possess. The first thing I think is really good about managed care is that has done a good job of containing costs. It has really slowed down the rising costs of health insurance. Also, MCO's favor preventative care and health promotion. Many people feel that if you get to the root of the problem, it will help our financial health costs, and managed care provides help for this.

Some of the negative things I feel about managed care is there is somewhat of a public dissatisfaction. As I said before, everyone wants the system to change and be better, but no one knows how to do it. Another negative thing about it is there are many limitations on what doctors you can see, and the ease of seeing a secondary doctor. There is also the issue of rising prescription drug costs that managed care does not address. All in all I think that even though managed care is not perfect, it is the best that we have right now. It has done a good job of controlling costs, and keeping individuals out-of-pockets costs down.

Until something better comes along, I think people need to realize that we are doing the best with what we have, and try to be more accepting and understanding. Americans have made health care the way it is today, so they need to understand big problems like this can't be changed overnight.