Managed Care Changes

Health Maintenance Organization (HMO) – HMOs are indeed the typical type of managed care health insurance plans, and they mainly focus on preventive care and wellness. Members pay a fixed annual premium and they only have limited access to certain physicians and hospitals within its network. Medical care is also limited to a prearranged. Most HMO plans require members to choose a network physician as a primary care provider (PCP). In addition, to consult with a specialists, members must obtain referrals from their PCP or their case manager. (USLegal.com)

Managed care was established in order to manage health care cost, utilization, and quality (Kongstvedt, 2015). In managed care, health insurance is provided through HMO, PPO, and other types of managed care. It has the potential to reduced health care spending and improved the quality of care. However, despite of its success in improving the quality of care through preventive health care services, chronic disease management program, and so forth, many physicians are reluctant to be part of the managed care environment. Some of the reasons are the impact of managed care to physician’s income and autonomy. Under managed care, insurers have decreased the fees paid to physicians. There are different ways how managed care organizations control costs. One of this is through selective contracting with health care providers and hospitals to lower costs. In selective contracting, health care providers agreed to accept lower prices in exchanged for guaranteed volume of patients under managed care plan (Culyer, 2014). This paper will discuss more issues and trends in Managed Care Organizations such as the rise of Medicaid Managed Care spending, the new Medicaid Managed care Rule, and the collaboration of Managed Care Organizations and Accountable Care Organizations to reduce health care spending and improve efficiency of care.

Managed care in the United States will constantly be changing or evolving. This is due to advances in technology, improvements made by the providers and deliverers of the services, new federal and state laws, and a shift towards a performance based system. Managed care will be delivered to the consumer in an affordable, innovative, and reliable manner with an emphasis on quality and accessibility.

Managed care as defined by Merriam-Webster.com is “a system of providing health care (as by an HMO or a PPO) that is designed to control costs through managed programs in which the physician accepts constraints on the amount charged for medical care and the patient is limited in the choice of a physician.” While the definition is appropriate for health plans, physicians and government entities focused on cost control and utilization reduction; it does not include the patient’s expectation of increasing quality of care.

There are also two other less common forms of managed care. Point-of-service organizations differ from the previous two forms because they allow their clients to choose a doctor outside of the network for a slightly higher copayment (Chitty & Black, 2007). The last type of managed care involves a hospital corporation teaming with a select group of medical staff. Their teams then negotiate with managed care organizations or self-insured employers to set fees for different services (Chitty & Black, 2007).

On the same level from a patient’s perspective, providers are even challenged with increased costs. Even though insurance is becoming more affordable the money, unfortunately has to be recovered utilizing other

Managed care organizations should have arrangement with both the medical insurers and providers to provide treatment for a contracted rate. Hospital should advertise the services they offer to members of healthcare plans through their healthcare provider by emphasizing on the technology, staff, and other quality of care they provide. Worker compensation plans are similar to commercial plans but treats injured employees. Hospital must contract with all workers compensation plans and must also negotiate coordination of benefits with other insurance carriers of the injured person to full compensate services. For Self pay patients hospital can reach out to them by having pre negotiate rates for treatment when payments are made in advance for certain procedures. Hospital should have system to accept payments when made in any

HMOs multiplied rapidly with the new federal giveaways. Managed care, now including PPOs, mushroomed. Employers initially perceived managed care plans as cheaper than traditional fee-for-service insurance. Gradually, they stopped offering a choice of health plans, making individual policies more expensive. HMOs' penetration of the industry had been subsidized into existence. Government had instituted managed care. Today, while overall quality of patient care remains the best in the world, doctors practice medicine in an increasingly intricate web of rationing and regulations: Physicians are stripped of professional autonomy. As patients wander the maze of managed bureaucracy, costs rise and quality deteriorates. Every American dependent on a third party for health coverage is a potential victim of managed care. And state sponsored management of medicine

The payment system in health care is evolving and if a health care organization does not change with it, it will fail. The health care organizations need to reduce their cost and reduce inpatient days because refund from the government can be affected. In addition, when costs and inpatients days are reduce, there needs to be other areas improved to gain more net worth. Therefore, quality needs to be improved so that there is more income entering the organization. Also, the leaders of the organization need to budget their finances so that they can reach all their goals and maintain their philosophy. According to Wolper (2013), “group practices have struggled to cope with declining reimbursement, increasing purchaser pressure, and a constantly shifting environment”. (p. 89) This is why I believe the payment system is one of the areas that will impact health care organizations now and in the future.

Even though there are many different challenges that will define strategic directions of the healthcare industry, five different challenges will be discussed within this paper. These challenges appear in all States and across the whole medical field from clinics, public hospitals, and private pharmaceutical companies. The selected challenges here will define what quality of services and terms that of the healthcare systems in the coming years. Because this involves several function variables, it is tough to know what to predict the progress of the systems within the health care industry.

Looking back, Physicians were chiefly employed by a Fee-for-Service payment model, in which they received payment for each individual service they provided, this in turn supplied incentives for Doctors to provide more treatments causing over-utilization of resources and thrusting healthcare costs into an all-time high and thus managed care was born. In short, managed care refers to "a wide range of financial and organizational models that attempt to control the cost of health care", including the "HMOs, PPOs, IPAs, PSOs, PHOs, IDNs, (Integrated Delivery Networks) and, as Leah Curtin, Editor of Nursing Management, once described them, 'OWAs' (other weird arrangements)" (Huntington, 1997). It essentially shifted the power from providers into the hands of the insurers which slowly pushed physicians away from independent practice and into group practice (Kongstvedt, 2013). Out

The Iron triangle for healthcare consists of cost, quality, and access; these three characteristics when balanced create great healthcare. Managed Care Organizations combine the three to offer consumers with care that is appropriate for their individual needs. Our book describes managed care organizations as “the cost management of healthcare services by controlling who the consumer sees and how much the service cost” (Basics of the U.S Healthcare System, Niles). Taking a look at the history prior to the Health Maintenance Organization Act of 1973 (HMO ACT of 1973) the implementation has been significant in balancing cost, and quality control. Before this Act was signed in to law by President Nixon healthcare costs were determined by fee for service. A fee for service or indemnity plan is a plan that allows the provider to determine the cost of service, this fee for service plan caused for healthcare costs to increase rapidly. An example of this would be going to the doctor with neck pain, being told to stretch then receiving a bill for 25,000 dollars. As could be understood the cost of healthcare had became a problem.

These strategies include Bundled or episodic payments in which conditions are set at fixed prices similar to DRGs, and the pay for performance model vs the fee for service model which includes monetary incentives for achieving health outcome goals. When discussing reducing costs, the issue of compromising quality arises and with these alternative options, quality of care is the cornerstone and is encouraged throughout. With Bundled payments, providers will be encouraged to work more efficiently and not grossly utilize unnecessary services since a set amount is put aside to cover care. Pay for performance is an incentive based approach that encourages providers to work efficiently and effectively to achieve set measures which like bundled payments will maintain the quality of care provided.

Within the last decade, health care has gone through drastic changes due to reforms that have impacted all levels of the United States health care system. From the 2010 enactment of the Affordable Care Act, the financial operations of many medical institutions have faced many improved and challenging transformations. Many of these transformations included the day to day administrative tasks, increased overhead expenses, and incurred costs brought on by practice and hospital adherence to new reforms. Currently, there is much debate on new reforms that would assist in improving the financial operations of the current health care system. Correspondingly, strong reforms have the ability to assist in making the health care system more efficient

As health care organizations are moving from fee-for-service reimbursement models to value-based care models, expeditiously, clinicians are becoming aware that the health care sector in the United States is changing. Clinicians who provide hospital services, and every point of service along the continuum thereafter, are mindful of emerging themes—improving the health of populations, enhancing the patient experience of care, and reducing the per capita cost of health care—these and other transformational changes are essential to ensuring health care organization attain fiscal sustainability in the 21st century.