#healthcare

Module Overview

According to the Tufts Healthcare Institute , “managed care links health insurance with an organized care delivery system for a defined population. As such, it requires that providers assume responsibility and accountability for the health of a defined population, and share financial risk inherent in assuming that responsibility. The goal of managed care is to provide the highest quality of care to individual patients and populations, efficiently and affordably. In the practice setting, managed care places special emphasis on coordinated and comprehensive services, appropriate use of both ambulatory and inpatient settings, evidence-based decision making, cost-effective diagnosis and treatment, population-based planning, and health promotion and disease prevention”. ( http://thci.org/other_resources/glossarymc.html#managedcare )

When one speaks of managed care, it is important to distinguish between managed care techniques and managed care organizations. In other words, Managed Care is generally discussed in two contexts. More commonly, managed care refers to a mechanism of providing health care services in a way that controls costs and quality. In a second context, managed care refers to a managed care organization.

Managed Care techniques/mechanisms include, but are not limited to: Provider incentives; Utilization Management; Health Promotion and Wellness; Patient Education; Prevention and Early Diagnosis. Of course, these vary based on the organization and/or plan.

A Managed Care Organization (MCO) is a generic term used to refer to a managed care plan. The main purpose of an MCO is to provide the infrastructure for the delivery and administration of care within a managed care system. In other words, the MCO is an organization that arranges to deliver health care services without having to use insurance companies or third party administrators.

Continuum of Managed Care

-----------Increasing Cost and Quality Controls ---------------→

Managed Care is best viewed on a continuum, with a number of plan types offering varied features. The following is a simple but useful tool for conceptualizing Managed Care.

Managed Indemnity, similar to traditional indemnity, is an insurance plan that reimburses for all services covered under its policy. The difference is that Managed Indemnity includes pre-certification of elective hospital admissions, as well as catastrophic case management.

Service Plans are most similar to traditional indemnity in that they provide specific health care services to the insured. The plan pays the hospital and providers directly except for any out-of-pocket costs. Examples include  Blue Cross/ Blue Shield plans. Service plan contracts with providers set maximums on fees, and prohibit balance billing. Balance Billing refers to the process of billing the patient for any leftover sum billed by the provider but not paid by the insurance company.

One of the products offered by Managed Care is known as Preferred provider Organization (Click here for a glossary definition of PPO ) which is a plan that contracts with independent providers at a discount for services. The plan is limited in size and has some type of utilization review system associated with it. A PPO can be a risk-bearing organization similar to traditional indemnity or a non-risk bearing organization that markets itself to other insurance companies.

Of the more commonly recognized products offered by Managed Care is the Health Maintenance Organization (Click here for a glossary definition of HMO ) which was originally defined as a prepaid organization that provided a comprehensive range of health care services to a voluntarily enrolled population in return for a predetermined amount of money on a monthly capitated basis. Capitated means that the HMO receives money on a Per Member / Per Month basis. As Managed Care has and continues to evolve, so does this definition.

Simply, an HMO may be viewed as a combination of a health insurer and a health care delivery system. Generally there are 5 commonly recognized models of HMOs. Read this PowerPoint Presentation on the various Models of HMOs .

POS/HMOs are plans in which members/patients decide at the time they need medical care whether to seek care from a provider on the panel or pay more and receive care from a provider not on the panel. This type of plan provides flexibility to patients - a patient may receive care from a panel provider on one occasion and receive care from a provider not on the panel on another occasion.

Open Panel HMO is a managed care plan that contracts with private physicians to deliver care in their own offices. Examples of this type of HMO would include direct contract HMOs and IPAs.

Closed Panel HMO is a managed care plan that pays for services only when they are provided by physicians and hospitals specifically on the plan's panel. These physicians and hospitals are considered "exclusive providers."

Gatekeeper is an informal, but widely used term that refers to a primary care physician (PCP) responsible for referrals or authorizations for non-emergency specialty care. The Gatekeeper is the provider of first contact. Gatekeeping refers to a method of coordinating and/or controlling utilization. This is a predominate feature of almost all HMOs. In future modules we will discuss the impact of the Gatekeeper on the cost and quality of care.

Required Readings

Ferris, T. G., et al. (2001). Leaving Gatekeeping Behind — Effects of Opening Access to Specialists for Adults in a Health Maintenance Organization. New England Journal of Medicine 345 (18), 1312-1317. Retrieved from http://content.nejm.org/cgi/content/full/345/18/1312 . PLEASE READ ABSTRACT ONLY.

Scandlen, G. (2005). Consumer-driven health care: Just a tweak or a revolution? Health Affairs 24(6), 1554.

Stiefel, R. H. (2010). Analysis: New hospital accreditation agency falls short. Biomedical Instrumentation & Technology, 44(4), 328-30.

Website Resources

NCQA (2008). Managed Care Organizations, Accreditation MCO. Retrieved from http://www.ncqa.org/Portals/0/Marketing/AdGuidelines/MCOAccredGuidelines2008_12_23_08.pdf

New York Health Plan Association (2011). Managed Care vs. FFS Chart. Retrieved from http://www.nyhpa.org/AboutHMOsinNY/ManagedCareVs.FFSChart.asp .

URAC (2011). General Questions About URAC Accreditation. Retrieved from http://www.urac.org/accreditation/ .

Optional Readings

Gitterman, D. P. (2000). The president and the power of the purchaser: Consumer protection and managed care in the United States. California Management Review 43 (1); 103.

Tietze, M. F. and Sinha, S. K. (2003). Impact of managed care on healthcare delivery practices: The perception of healthcare administrators and clinical practitioners/Practitioner application. Journal of Healthcare Management 48 (5); pg. 311.