Post on 18-Dec-2015
Chapter 9Chapter 9
Managed Care Managed Care and Managed and Managed
Care Care Organizations Organizations
(MCOs)(MCOs)
NOTE: In Quiz 2 and the final examNOTE: In Quiz 2 and the final exam
this chapter will be a little more this chapter will be a little more heavily weighed than other chaptersheavily weighed than other chapters
What is Managed Care?What is Managed Care?
Core feature: Core feature:
It integrates the functions of It integrates the functions of financing, insurance, delivery, and financing, insurance, delivery, and payment payment
Integration of the Quad Functions - 1Integration of the Quad Functions - 1
Financing – contract negotiations between Financing – contract negotiations between employers and MCOsemployers and MCOs
Insurance – Insurance – The MCO assumes risk The MCO assumes risk
The need for an The need for an insuranceinsurance
company is eliminatedcompany is eliminated
Risk is often shared with Risk is often shared with
the providersthe providers
Integration of the Quad Functions - 2Integration of the Quad Functions - 2
Delivery – The MCO must arrange to Delivery – The MCO must arrange to provide a comprehensive array of provide a comprehensive array of servicesservices
Payment – Payment – CapitationCapitation
Discounted feesDiscounted fees
SalarySalary
Other Characteristics of Managed Other Characteristics of Managed CareCare
Defined group of enrolleesDefined group of enrollees Limits on choice of providersLimits on choice of providers Utilization managementUtilization management Financial incentives to providers for Financial incentives to providers for
efficiencyefficiency Accountability for plan performance Accountability for plan performance
(quality)(quality)
Enrollments in Managed Care: Enrollments in Managed Care: 20022002
Private: Private: 95% 95%
Medicare: Medicare: 13% 13%
Medicaid: Medicaid: 55%55%
Forces Behind Managed CareForces Behind Managed Care
Health Maintenance Organization Act Health Maintenance Organization Act 1973 provided federal funds to start 1973 provided federal funds to start new HMOsnew HMOs
Escalating health insurance costs – Escalating health insurance costs – Figure 9-5, p. 333Figure 9-5, p. 333
The System Before Managed CareThe System Before Managed CareFee-for serviceFee-for service The insured had direct access to any The insured had direct access to any
provider, PCP or specialistprovider, PCP or specialist Itemized billing of charges by the provider Itemized billing of charges by the provider
to the insurerto the insurer Few, if any, controls over the amount of Few, if any, controls over the amount of
paymentpayment Sickness coverage; no coverage for wellness Sickness coverage; no coverage for wellness
and preventionand prevention Insurers functioned simply as passive Insurers functioned simply as passive
payers of claimspayers of claims
Flaws in Fee-for-serviceFlaws in Fee-for-service
Various kinds of inefficiencies – see Various kinds of inefficiencies – see p. 332 p. 332
Moral hazardMoral hazard Overutilization of specialty careOverutilization of specialty care Charges set at artificially high levelsCharges set at artificially high levels Provider-induced demandProvider-induced demand Physicians benefited financially by Physicians benefited financially by
putting patients in the hospitalputting patients in the hospital Inefficiencies were absorbed by Inefficiencies were absorbed by
raising premiumsraising premiums
Cost Control in Managed CareCost Control in Managed Care
Elimination of intermediaries – tight Elimination of intermediaries – tight integration of quad functionsintegration of quad functions
Control over reimbursement – Control over reimbursement – capitation risk sharing or discountscapitation risk sharing or discounts
Utilization management Utilization management
Utilization ManagementUtilization Management
Choice restrictionChoice restriction– In-network accessIn-network access – no open access – no open access– Out-of-networkOut-of-network access, but pay extra access, but pay extra
GatekeepingGatekeeping by a PCP by a PCP Case managementCase management for complex cases for complex cases Utilization ReviewUtilization Review Practice profilingPractice profiling
Utilization Review (UR)Utilization Review (UR)
Case reviewCase review Determine the most appropriate type Determine the most appropriate type
and level of service and level of service Plan subsequent carePlan subsequent care
Three Types of URThree Types of UR
Prospective URProspective UR Concurrent UR and Concurrent UR and discharge discharge
planningplanning Retrospective URRetrospective UR
Types of MCOsTypes of MCOs
HMOsHMOs PPOsPPOs POS PlansPOS Plans
Why Different Types?Why Different Types?
HMOs did not become widely popular HMOs did not become widely popular (except in California and Minnesota) – (except in California and Minnesota) – Figure 9-8, p. 341. The main Figure 9-8, p. 341. The main drawbacks of HMOs were:drawbacks of HMOs were:
– Choice restriction (for enrollees)Choice restriction (for enrollees)– Capitation (for providers)Capitation (for providers)– Utilization management (for both)Utilization management (for both)
HMOsHMOs
Emphasize preventive careEmphasize preventive care Capitation is the method used to pay Capitation is the method used to pay
providersproviders Carve outsCarve outs for certain specialty for certain specialty
servicesservices In-network accessIn-network access GatekeepingGatekeeping Standards of qualityStandards of quality
HMO ModelsHMO Models
StaffStaff GroupGroup NetworkNetwork Independent practice associations Independent practice associations (IPAs)(IPAs)
Study from the textbook what these Study from the textbook what these models are and their main advantages models are and their main advantages and disadvantagesand disadvantages
HMO EnrollmentsHMO Enrollments
Figure 9-9, p. 344Figure 9-9, p. 344
PPOsPPOs
Sickness careSickness care Discounted fees is the method used Discounted fees is the method used
to pay providers (no risk sharing)to pay providers (no risk sharing) Both in-network and out-of-network Both in-network and out-of-network
accessaccess Generally, no gatekeeping Generally, no gatekeeping Generally, loose utilization managementGenerally, loose utilization management
PPO EnrollmentsPPO Enrollments
Figure 9-10, p. 346Figure 9-10, p. 346
POS PlansPOS Plans
Cross between HMO and PPOCross between HMO and PPO HMO features are retained HMO features are retained PPO features are available at the PPO features are available at the
point of servicepoint of service
POS EnrollmentPOS Enrollment
Figure 9-11, p. 346Figure 9-11, p. 346
Trends in Managed CareTrends in Managed Care
Figure 9-12, p. 347Figure 9-12, p. 347
Health insurance premiumsHealth insurance premiums
Figure 9-13, p. 348Figure 9-13, p. 348
Medicaid EnrollmentMedicaid Enrollment
Balanced Budget Act 1997 allowed Balanced Budget Act 1997 allowed states to enroll Medicaid states to enroll Medicaid beneficiaries in managed carebeneficiaries in managed care
Unavailability of managed care plans Unavailability of managed care plans in some geographic locationsin some geographic locations
MCO pulloutsMCO pullouts Primary care case managementPrimary care case management
(PCCM) programs: direct contracting (PCCM) programs: direct contracting with providers by states with providers by states
Medicare EnrollmentMedicare Enrollment
Medicare beneficiaries have the Medicare beneficiaries have the option to remain in the fee-for-option to remain in the fee-for-service programservice program
Capitated Capitated risk contractsrisk contracts MCO pullouts due to reduced MCO pullouts due to reduced
capitation under the BBA 1997 capitation under the BBA 1997 Problem: Medicare capitation is not Problem: Medicare capitation is not
based on based on risk adjustmentrisk adjustment
Impact on cost, access, and qualityImpact on cost, access, and quality