Question

US HEALTHCARE Managed Care For years, your parents had a traditional fee-for-service health insurance. They are now required to switch to a managed care product. They are very upset because they love their physicians. However, their physicians did tell them they had contracted with certain MCO's to provide services. You parents were still confused. Explain the managed care principle, and which program would enable them to use their practitioners.

Answer 1

Managed care

Managed care is a system of health insurance characterized by a network of contracted providers providing health services to a defined population for a fixed payment.

Managed care places special emphasis on the appropriate use of ambulatory and inpatient settings, evidence-based decision making, costeffective diagnosis and treatment, population based planning, and health promotion and disease prevention.

Managed care principles

Managed care in its current forms has evolved in response to purchaser demands to control costs. However, the principles behind this system are intended to provide highquality, cost-effective health care to a population. These principles represent the vision of its proponents to change fundamentally the fragmented delivery system in the USA. In this vision, a managed care organization is responsible for managing the care of a population through a health care system that

• monitors and coordinates care through the entire range of services (primary care through tertiary services);
• emphasizes prevention and health education;
• encourages the provision of care in the most appropriate setting and by the most appropriate provider (e.g. outpatient clinics versus hospitals, primary care physicians versus specialists);
• promotes the cost-effective use of services through aligning incentives (e.g. by capitation of providers, cost-sharing by consumers).

Types

There are several types of network-based managed care programs. They range from more restrictive to less restrictive:

Health maintenance organization (HMO)

An HMO is a coordinated delivery system that combines both the financing and the delivery of health care for enrollees. In the design of the plan, each member is assigned a "gatekeeper", a primary care physician (PCP) responsible for the overall care of members assigned. Most HMOs require patients to choose (from the HMO network) a physician as a primary care provider (PCP) who must first be consulted for any medical concern. Specialty services require a specific referral from the PCP to the specialist. Non-emergency hospital admissions also require specific pre-authorization by the PCP. Typically, services are not covered if performed by a provider not an employee of or specifically approved by the HMO unless it defines the situation to be an emergency.

Independent practice association (IPA)

An Independent Practice Association is a legal entity that contracts with a group of physicians to provide service to the HMO's members. Most often, the physicians are paid on a basis of capitation, which in this context means a set amount for each enrolled person assigned to that physician or group of physicians, whether or not that person seeks care. The contract is not usually exclusive so individual doctors or the group may sign contracts with multiple HMOs. Physicians who participate in IPAs usually also serve fee-for-service patients not associated with managed care.

Preferred provider organization (PPO)

In a PPO, the managing entity is not always the insurer; it also may be an employer or a plan administrator. Discounted rates are negotiated with specific health care providers in return for increased patient volume. However, members may choose providers outside of the PPO network, but they will have to pay more to do so.

Point of service (POS)

The designation of POS refers to the fact that the amount of co-payment an insured pays is dependent upon the “point of service.” If an insured member goes outside of the plan network to receive care, the co-payment is higher, as network providers have agreed to accept a discounted rate for services in return for patient volume and patient referral.

Private fee-for-service (PFFS)

There are basically two types of health insurance: fee-for-service (indemnity) and managed care. Policies may vary from low cost to all-inclusive to meet different demands of customers, depending on needs, preferences and budget. Fee-for-service is a traditional kind of health care policy: insurance companies pay medical staff fees for each service provided to an insured patient. Such plans offer a wide choice of doctors and hospitals.

Fee-for-service coverage falls into Basic and Major Medical Protection categories. Basic protection deals with costs of a hospital room, hospital services, care and supplies, cost of surgery in or out of hospital, and doctor visits. Major Medical Protection covers costs of serious illnesses and injuries, which usually require long-term treatment and rehabilitation period. Basic and Major Medical Insurance coverage combined are called a Comprehensive Health Care Plan. Policies do not cover some services.

Managed care in indemnity insurance plans

Many "traditional" or "indemnity" health insurance plans now incorporate some managed care features, such as precertification for non-emergency hospital admissions and utilization reviews. They are sometimes described as "managed indemnity" plans.

HMO might be best programme for the parents to use their practioner as they can choose their own primary care provider.