Question

How do MCOs achieve cost efficiencies by integrating the quad functions, risk sharing with providers, and care coordination? What are some of the inefficiencies created by managed care?(300 words) Not from textbook solutions please

Answer 1

Managed care work on the objectives to achieve efficiency by integrating the basic functions of health care delivery & it employs mechanisms to control/manage utilization and cost of medical services.

Furthermore managed care is the dominant health care delivery system in the United States covering most Americans in both private and public health insurance programs through contracts with a managed care organization (MCO).

At the same time economic realities caused employers to pick MCO because of the increased price in private insurance.

Henceforth by integrating and adopting the quad functions of health care delivery, MCOs try to eliminate insurance and payer intermediaries & therefore offer some savings.

At the same time risk sharing offered by these agencies promote delivery of health care that is economically practical.

Hence, risk sharing is an indirect method of utilization control. Cost savings are achieved by coordinating a broad range of patient services and by monitoring care to determine whether it is appropriate and delivered in the most cost-effective way.

The MCO pays providers either through a capitation (per head) arrangement, in which providers receive a fixed payment for each enrollee under their care, or by a discounted fee arrangement.

Providers are willing to discount their services for MCO patients in exchange for being included

in the MCO network and being guaranteed a patient population.

At the same time it is seen that most providers find the complexity in dealing with numerous plans devastating. A remarkable amount of inadequacy is formed as providers must deal with the protocols adopted by each plan.

But it is well established fact that MCOs can lower the cost using discounts and hence quality of health care provided by MCOs has improved over time.