Efficiencies and Inefficiencies in Managed Care - Essay Example

Managed Care Insurance Elements Managed care, in this present day context, has evolved as a matured industry in the US. It became a prime requisite of developing different healthcare facilities in the private sector. To develop the overall qualities of healthcare, various states along with local authorities are involved in enrolling into Medicaid beneficiaries for ensuring quality services related to managed care. The development of Medicare Advantage (MA) has certainly found a source of value within its beneficiaries (Shi & Singh, 2011). Employment-Based Health Insurance Enrolment The popularity of the managed care system has emerged in this modern world and the employers in the present day context get involved in making as well as executing an effective plan with utmost focus on paying premiums. These premiums are paid by the workers in the form of deductibles, copayments as well as through contribution. It has been apparently recognized that this changed system of healthcare has transformed the investment pattern of the employees. In the year 2013, highest number of employees was recorded to be enrolling in the Preferred Provider Organization (PPO) plans. The same has been illustrated in the form of the following chart: Fig. 1: Managed Care Enrolments Source: (Shi & Singh, 2011) Managed Care and Health Insurance Exchanges Managed care has proved its dominance in providing “qualified health plans” with the aid of different health insurance organizations. Specially mentioning, there is a need to follow the rules that are provided under the Affordable Care Act. The ACA prescribed system of medical loss is noted to be limiting the percentage of premium revenue for enhancing its use for administration, marketing as well as attaining maximum profit. However, to increase the transparency within the system, more regulations are required to be incorporated by the respective government. To increase the competition within the domain of healthcare aid, there are various additional developments being initiated to incorporate within the domain of healthcare based operations. This competitive edge is being developed with the notion to enhance the control over the premium rate fluctuations (Shi & Singh, 2011). ACA visualizes that Consumer Operated and Oriented Plans (CO-OPs) will be developed based on finances received from the federal government. This type of plans is available in small numbers within the US Medicaid services. CO-OPs started operating as nonprofit making organizations following the developments such as the Health Maintenance Organization (HMO) and PPO. CO-OPs are even structured based on standard models of such organizations that have been already active within Medicaid peripherals. With the intention of providing better healthcare services, the CO-OPs are developed with effective plans for being responsive to members as well as addressing the specific healthcare needs of the enrollees (Providence Health & Services, 2015). Notably, strict regulations imposed by the federal or state government could either catalyst or create a blockage for the development of such plans at large. This has even been observed that there are HMOs who has attained approval from state governments for enrolling non-Medicaid members. This could be inferred that if the HMOs operating with the non-Medicaid enrollees, the overall premium structure of the market can get affected at large (McQueen, 2013). Conversely, based on the diverse needs of Medicaid and varied range of healthcare services, it is difficult to decide cost of premium that could be attached with the plan. Major concerns are noted amongst the service providers in relation to the fact that chances are prominent in the overall costs of premium to get changed with the number of HMO exchanges participating in the market. Moreover, there also exist the chances of confirming the fact that low rates of premium adversely affect the new exchanges to serve the members with wide range of services (McQueen, 2013). Medicaid Enrollment Waivers specified under ACA in Sections 1115 and 1915 (b) authorize individual states with the ability to enroll Medicaid recipients under tailor made managed care programs. However, the Balanced Budget Act of 1997 enhanced the authority of the states to mandate programs related with managed care and the requirement of federal waivers to get eradicated from the system (Shi & Singh, 2011). With the change in the system of managed care in the states and federal services, there has been a growth in the Medicaid beneficiaries that are related with the HMOs. This was identified from the increase of 56% in the year 2000 to 75% during the year 2012. Correspondingly, a majority of new Medicaid as well as CHIP beneficiaries that are registered under ACA are estimated to be 7 million, which are to be included within the domain of managed care. Additionally, the states have incorporated various models of providing managed care specifically as per the needs of the rural areas where there is lack of development and availability of healthcare facilities. Several models are available in relation to the domain of managed care, out of which, the most important one is reckoned to be Primary Care Case Management (PCCM). This model requires a Medicaid enrollee to elect a Primary Care Physician (PCP) who will be responsible for coordinating with the enrollee to fulfill his/her the needs and receiving payments against the services being provided. In this regard, the operating programs are fee based and are reimbursed based on fees charged against the level of services that they provide. It is noted that more than 30 states under the US government are operating with the PCCM model. Medicare Enrollment and Payment Reforms Medicare beneficiaries operating under the present domain of healthcare services in the US have the opportunity to register in Medicare Advantage listed under Part C. However, they can even opt to remain under the traditional settings of fee for services. Conversely, there has been change in the enrolments that are provided under Part C of the Act. It can be affirmed that there are chances of having fluctuations within the payment of MCO services with the increase as well as decrease in enrollment numbers (Shi & Singh, 2011). Observably, this change within the domain of Medicare adversely affected the rates of enrollment, owing to the reason that with the changed rate of capitation, fewer MCOs were interested in participating under the programs detailed in Part C. For example, the Balanced Budget Act of 1997 reduced the rate of payments made towards HMOs. This resulted in the withdrawal of MCOs from the Medicare programs that were operating during the period and thus 800,000 beneficiaries who were enrolled under the same lost their HMO coverage in the years 2000 and 2001. Enrollment in programs that were based on the notion of Medicare+choice recorded a decline from 6.3 million during December 1999 to 5 million in February 2002. The percentage accumulated to be a rate of 21% during the tenure. To control the situation that has risen as an outcome of bailouts, the Centers for Medicare and Medicaid Services (CMS) developed a new payment plan between the years 2003 and 2007, which was based on risk adjustments in terms of Hierarchical Condition Categories. This initiated maintenance of risk accounting for the beneficiaries being enrolled under the healthcare programs. These changed rules certainly enhanced the quality of healthcare and even reflected on a growth within the domain of healthcare programs. Efficiencies and Inefficiencies in Managed Care Measuring Managed Care Effectiveness Several evaluating aspects are present within the system to measure cost, quality as well accessing services and thus no generally accepted principles exist to measure the efficiency of the system. Based on the divergent objectives of stakeholders and identified goals for making investments, there is a diversification in the accreditation provided to the services. However, the three basic measurements are common for each healthcare system that reflects on the quality of care being provided to the individuals. There are several other interpretations available for measuring the effectiveness of healthcare system but are generally outlined based on three basic ideologies. Identifiably, most of the available health system evaluation principles are determined to be process indicators or majorly measure condition-specific outcomes to detail the efficiency of the program. Based on the diversity that is prominent within the domain, it can be affirmed that effort is being dedicated for assessing tools measuring efficiency in order to improve its usefulness to indicate the efficiency of the same. Regional as well as national efforts are in progress to enhance the results that are attained from the performance databases. It can be found that several independent initiatives are being incorporated to increase standards that are meant for specific qualities as well as support the needs of definitional consensus. In this concern, the National Committee for Quality Assurance (NCQA) introduced around 100 well-detailed measures about the level of health plan quality being maintained within its Health Plan Employer Data Information Set (HEDIS) reports. Additionally, with the expansion made in the domain of managed care, the need for specific quality measures has emerged as a primary need for consumer satisfaction. Although at the level of healthcare measurement of performance in terms of quality of services has become a common need, reporting requirements for the same to increase its efficiency are yet to be standardized as an efficient measurement for comparison. Performance measures majorly reflect on the needs of the individual stakeholders i.e. licensure and accreditation provider. For instance, a certain number of MCOs regard the medical loss ratios as one of the tools for performance measurement. The loss ratios that deemphasize by MCOs indicate the share of premium dollars against medical expenses as well as develop a perception of the organizations interests towards managing medical expenses. However, these ratios even act as an efficient support that can restrict investment growth as well as limit the efficient enhancement of the program in terms of quality. To initiate growth and ensure prominence in the measurement system, there are certain industry-wide baselines that are used for performance measurement. Correspondingly, organizations such as Pacific Business Group on Health as well as NCQA are developing their individual measurement tools to enhance transparency within the healthcare system. To increase more efficiency within the domain of healthcare system, the organizations are putting up their ratings on individual websites. This system is going to enhance the level of transparency within the domain of managed care and even provide a formal rating for measurement. However, due to the lack of introducing a generally accepted standard for measuring the efficiency of a program, stakeholders develop and promote information that hardly adheres to the external as well as internal reporting requirements. Conversely, this could be argued with reference to the fact that with the increase in experiences of the stakeholders in the specific field, there are chances of refinement within the basic measurement tools. The following sections outline the barriers that block the development of proper measurement of managed care. Opportunities for gain. Observably the premium competition that was evident in the mid 20th century within the managed care domain paved ways for low priced healthcare plans to expand their application. However, in the present era, the new plans are being developed based on the demographic structure of the population and diverse needs of healthcare. To comply with the needs of the populaces, the organizations are involved in providing tailor made healthcare products. Correspondingly, it can be argued that this growth is going to slow down the system efficacy and further degenerate the requirement of association (Schield, Murphy & Bolnick, 2000). Conflicts of interest. With the diversification in the needs of the services and development of the system of healthcare, there lays a chance of rising conflict of interests amid the stakeholders. There can be huge differences among the individual needs of stakeholders that might fail in fulfilling the stated objective. This divergence eventually raises the situation of conflicts and thus affects the overall system of healthcare. For instance, to retain a proper number of enrollee, a HMO must be able to meet the needs of its external stakeholders in terms of ensuring better administrative support as well as efficiently carry out their administrative duties (Schield et al., 2000). Incremental reform. Based on the recent progression witnessed in the domain of healthcare, small reforms have been introduced to meet the overall needs of the individuals relating to healthcare. Certain changes that are planned to be incorporated within the system are majorly based on the individual needs of small interest groups. The reforms that cover huge needs of the society are often cost effective and thus affect the overall trend of the market. Correspondingly, the review of present market condition reflects the needs for development, as it lacks the overall need for establishing the principle needs of quality, cost as well as access (Schield et al., 2000). Five Trends Having a Significant Impact on System Effectiveness Demographic change. Several changes are identifiable within the domain of healthcare. One of such specifications is the change in the demographic structure of the population. The review of the demographic structure within the current population reflects on a change in the system of providing care. Additionally, it can be apparently noted that by incorporating more people within the plan, the ability of the service providers to negotiate premium payments will increase at large. However, this increase in the level of providing efficient care would raise the chances of causing discrepancies. It is projected that the increased amount of people within the healthcare system will certainly lead towards diversification in the demographic structure and stratification of needs. Thus, this is even going to increase the clarity of approaches that detail out an effective measurement of the efficiency of plans. It is worth mentioning that the quality measures should be apportioned in such a way so that the diverse needs of the consumers get fulfilled on a long-term basis (Schield et al., 2000). Changing Employer Funding and Purchasing Practices. Most of the big companies providing quality healthcare services are noted to generate their respective funding needs on an individual basis. In relation to the above context, it can be apparently observed that the organizations opting for self-insured employers are often excused from the regulations provided under the state authority as mentioned under Employee Retirement Income Security Act (ERISA). Additionally the beneficiary features that are available for self-funded employers reveal that these provide tailor-made benefit packages to the enrollees. Furthermore, the financial risks assumed by the healthcare segment undertaking self-insurance provide the employers an added benefit to collect as well as analyze performance data. Specially mentioning, there has been a diverse trend reflecting the needs of healthcare and even deviates based on the individual requirements of the employees. Thus, it can be stated that if a trend depicting the needs of extreme develops, chances of influencing relative roles as well as power of diverse stakeholders could not be nullified. Moreover, this could even change the overall nature of managed care systems that are prevalent within the domain of healthcare (Schield et al., 2000). Consolidation among payers and providers. With the incorporation of cooperative systems such as mergers as well as consolidations, the overall system of managed care has evolved. There has been an increased amount of competition within the health insurance industry. This changed system has integrated greater level of collaboration amid the stakeholders, resulting in creating the chances of having mergers amid the competitors. With this integrated system of services, the organizations are inclined towards making long range planning and developing their existing plan towards healthcare providence. Trends in performance measurement. Tools that are used for measuring the efficiency of healthcare performances are noted to be developing at large in this contemporary world. Besides, the basic measures based on quality, access as well as cost risk, adjustment tools have gained much popularity amongst the masses. Additionally, with the progression in information sharing and enhancement of technology, the measurement tools are being developed in such a way so that these are capable enough to meet the flexible needs of the society. Regulatory activity. Regulatory activities even vary based on the individual needs of the consumers. This can be justified with reference to the fact that certain consumers lay specific stress on individual factors, whereas others on the diverse needs of care giving. The Balanced Budget Act of 1997 was proposed to lower down Medicare as well as Medicaid expenditures in order to eliminate any sort of loophole prevailing within the program. This was done with the motive to reduce the amount of potential revenues for the service providers. It was even noted that the new reforms that were proposed based on risk management would efficiently integrate the factors concerning budgeting and care management for healthcare programs. However, with the incorporation of consumer protection legislation, the service providers and insurers became more litigated. Inefficiency The major inefficiency of the program could be identified with the needs of the people who are financially weak and are not covered within the Medicare programs. Several unscrupulous elements are noted within the domain that restricts the needs of the financially agile sections and thus improper management of financial stability was visible within the framework of healthcare. By constricting the level of providers’ revenue, the government restricts the ability of the providers to enhance their capacity to serve in a better and efficient manner. Managed care based principles and operational measures are noted to be inefficient for such institutions that plan programs and develop healthcare facilities without concerning the individual needs. The justifications that are provided by managed care for inclusion of such clauses reflect the notion that these institutions are likely to weaken the overall system and affect the quality of care. The regulations and specifications that are provided within the periphery of managed care are noted to be restricting the overall performance of the managed care system. Furthermore, with very little discretion provided for the system, the managed care programs fails to meet the individual needs of the poor and financially instable individuals. Identifiably, there exist very few specifications that support the needs of long-term care. The managed care programs that are prominent within the society fail to comply with the diverse long-term needs of healthcare amid the individuals. Specially mentioning, there has been a huge lack of specification within the system for providing mainstream medicinal assistance. Moreover, the improper maintenance of administrative cost is even going to impose considerable impact on meeting the diverse needs of the people. Conclusion Irrespective of several disadvantages, many organizations within the state are attracted to continue with their alliance with managed care under Medicaid services. It is a belief of the government officials that these managed care programs provide anticipatory budget while promoting quality as well as developing continuity of care. With the identifiable progression made in the periphery of managed care, developments are likely to be integrated in terms of providing quality care. Furthermore, despite of various level of opposition, consumers as well as providers are quite comfortable with the existing principles that are prominent within the domain of Medicaid prepayment services. Prepaid plans offer conscious care for Medicaid patients that strengthen the monitoring efforts towards improving skills for maintaining the needs of administrative staff. References McQueen, M. P. (2013). A different kind of Medicaid expansion. Retrieved from http://www.modernhealthcare.com/article/20130727/MAGAZINE/307279991 Providence Health & Services. (2015). Health care reform comes to Oregon in first CO-OP. Retrieved from https://healthplans.providence.org/about-us/news-notices-announcements/health-care-reform-comes-to-oregon-in-first-co-op/ Schield, J., Murphy, J. J., & Bolnick, H. J. (2000). Evaluating managed care effectiveness: A societal perspective. Evaluating Report, 1-40. Shi, L., & Singh, D. A. (2011). Delivering health care in America. USA: Jones & Bartlett Publishers. Read More