Managed Care: Defragmenting Health Care?

1. Managed Care: Defragmenting Health Care? HCA 701 U.S. Health Care System

2. What is managed care? • An organized effort by health insurance plans and providers using financial incentives and organizational arrangements to alter provider and patient behavior so that health care services are delivered and utilized in a more efficient and lower-cost manner.

3. Objectives of managed care • Enhanced cost containment • Some forms of rationing • Promote administrative an clinical efficiency • Reduce duplication of services • Enhance appropriateness of care • Promote comprehensive contracting mechanisms • Manage care processes by managing provider consumer behavior

4. Components of Managed Care • Purchaser/payer, including: • Employers who purchase health insurance for their employees • The federal Medicare program • Federal/state Medicaid program • Health insurance plans providers of care • Patients/public • Brokers

5. Types of Managed Care Plans • Preferred Provider Organization • Health Maintenance Organizations • Point of Service Plan

6. PPO • A fee-for-service type of health plan giving broader choice of providers or a narrower choice of providers at a discounted rate • the larger the plan the greater the discount. • providers count on plan’s members to use them for services to help offset the discounted rate.

7. HMO • A prepaid health plan delivering comprehensive care to members through designated providers • Fixed monthly payment for health care services • Requires members to be in a plan for a specified period of time (usually 1 year). • Patients restricted through financial incentives to use only providers in the plan. • Out of network use results in high co-payment • Limited choice of providers take responsibility for a list of enrolled patients. • Providers are paid a capitation rate based on a fixed fee per patient • A method of payment for health services in which the provider is paid a fixed amount for each patient without regard to the actual number or nature of services provided.

8. Benefits of HMO • Benefit to health plan provider – limits financial exposure by paying the provider group a fixed amount for taking care of the enrolled population. Plan is not required to pay any additional fees for care. • Provider benefit – steady stream of revenue whether individual patients seek care or not. • Patient benefit – low or no co-payments, deductibles or other payments.

9. Point of Service Plan • Combination of HMO and PPO • Provides advantage of allowing patient to go beyond normal HMO providers for specialized services

10. Critical Components for MC • Preparing and educating covered members • Information systems and insistence on quality outcome measures • Plan/Provider Control of Utilization – controlling provider and patient behavior • Use of gatekeeper (primary care physicians and “hospitalists”) • Capitation • Risk sharing - establishing a pool of money from which services are paid throughout the year. • Intended to provide an incentive to reduce use • Concerns arise if risk pools and capitation reduces needed services to patients • Contracting

11. Future of Managed Care • Consolidation of Health Insurance Plans – consolidation is rapidly taking place among MC plans either through mergers or buyouts. • MC has led to a growth of new organizational arrangement among providers. • Medicare/Medicaid and Managed Care • Medicaid programs are rapidly moving towards managed care. • Mental Health and Managed Care – MC is increasing at an explosive rate. Use of triage systems to better align patients into their proper care categories.

12. Medicaid Waivers & Managed Care Growth • Managed care programs seek to enhance access to quality care in a cost-effective manner. • Waivers provide States greater flexibility in design and implementation of Medicaid managed care programs. • The number of Medicaid beneficiaries enrolled in some form of managed care program is growing rapidly, from 14 percent of enrollees in 1993 to 58 percent in 2002.

13. Medicaid Managed Care Program Successes • Managed care is the prevalent delivery system in Medicaid, with 59 percent of beneficiaries receiving some or all care through managed care instead of fee-for-service. • Forty-eight states, the District of Columbia and Puerto Rico operate Medicaid managed care programs, with about 23.1 million beneficiaries enrolled in 2002, an increase of over two million since 2001. • Enhancing access to providers and emphasizing preventive and routine care, health plans have successfully improved the quality of care received by enrollees in the Medicaid managed care program.

14. Medicaid Managed Care Program Goals • Establish a medical home for Medicaid clients through a Primary Care Provider (PCP) • Emphasize preventive care • Improve access to care • Ensure appropriate utilization of services • Improve health outcomes • Improve quality of care • Improve client and provider satisfaction • Improve cost effectiveness

15. Disease Management • Treating chronically ill through integrated teams • Acute illness prevention • Requires understanding the factors that drive costs. • Uses data about available resources and analyzing choices that affect the quality and cost of care. • Understanding processes of medical care improves clinical results and produce and lower overall costs • Assigns the appropriate provider manage patient care which can improve quality and cost-effectiveness. • Encourages the use of a specialist as gatekeeper • Changing patient behavior

16. Components of the Disease Management Process • Access and demand management • Reduction in variation of care through clinical process involvement. • Attention to service quality and patient satisfaction. • Outcomes Driven Care. • The disease management provider team for treatment of diabetes • Master’s level nurse educator/CDE - Team Leader • Specialist • Primary care physician • Registered Dietitian/CDE • Exercise Physiologist