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In: Operations Management

With the advent of managed care, medicine changed radically. If you went to the ER with...

With the advent of managed care, medicine changed radically. If you went to the ER with abdominal pain in the 1970's or mid 1980's, they would run a battery of tests right away to determine the problem. This benefited the patient because a lot was ruled out immediately. It also benefited the hospital because they could generate income from all of the tests which were run.

Fast forward to the late 1980's and early 1990's through today. Managed care dictates pathways to which physician's must adhere when treating patients. A patient presenting to the ER with abdominal pain now goes through a much different plan of care with a more narrowed and structured set of testing which is performed, often causing longer ER stays and delays while requested testing is approved by insurance carriers.

The pathways were set up to curb over-ordering of services and decreasing costs. One way managed care organizations try to discourage use of ERs (they prefer patients to see their primary care doctor first if at all possible) by having a much higher copay for ER services. The reasoning behind this is primary care doctors are usually much more aware of how an insurance plan work, spend more time with the patient, and thus overall reduce costs by ordering tests which are more likely to identify the problem. ER physicians are under more time constraints and may not always check what insurance the patient has before running test. Thus, except for real emergencies, the patients and the insurance company are paying much less for care by using primary care physician versus the ER.

Do you think patients with managed care insurance are influenced by differences in copay amounts between the PCP and ER? Do you think the average person really understands managed care?

Solutions

Expert Solution

Do you think patients with managed care insurance are influenced by differences in copay amounts between the PCP and ER?

Copay is the predetermined rate that individuals pay for specific health care services. For example, an average copay existing in the U.S.:

  • Primary care physician [PCP] is $25
  • Medication is $10 and
  • Emergency room [ER] visit $250.

The above charges clearly illustrate the Copay varies with respect to ER and PCP.

Further Considering different types of managed care services;

  1. Health maintenance organization (HMO)
  2. Independent practice association (IPA)
  3. Preferred provider organization (PPO)
  4. Point of Service (POS)
  5. Private fee-for-service (PFFS)
  6. Managed care in indemnity insurance plans

In every plan, the health care service provider will provide the amount insured and if the cost of health service is above it, then it needs to be taken care of by the patient.

Therefore patients with managed care insurance are influenced by differences in copay amounts between the PCP and ER.

Do you think the average person really understands managed care?

Yes, an average person may able to understand the managed care because as illustrated above there are only 6 different schemes available in the US, further they are very similar with respect to policy terms. The most important policy was also illustrated above i.e. the patient will receive only the insured amount.


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