Managed Care as an Important Dominant Force - Essay Example

Managed Care Introduction Managed care has been an important dominant force that has fundamentally transformed the process based on which, health care services are provided in the United States, since 1990s. Initially, the managed care phenomenon was identified as a deviation, but as private employers began to realize cost savings, they have adopted managed care. In addition, public policymakers and administrators identified it as an opportunity to minimize the growing expenditures in Medicare as well as Medicaid programs that have been increasingly inclined towards managed care. In the present day context, managed care has remained deeply rooted in the US health care system. The graphical representation below illustrates that in the year 2013, employer-sponsored health insurance has been registered at less than 1% of employees in traditional fee-for-service plans. In the recent years, high-deductible health plans have gained popularity wherein the share of managed care registration has declined proportionately. Additionally, it has been noted that traditional health insurance has been in the stage of extinction today. It has been also identified that High Deductible Health Plans paired with a saving option (HDHP/SO) has been included in the survey of health plans registration from the year 2008 (Kaiser Family Foundation, 2014). Figure 1: Percentage of Enrollment in Health Plans, Selected Years Source: (Kaiser Family Foundation, 2014) The health care service, i.e. managed care, has its origin in the United States, but the tools of managed care have spread on a global context. Identifiably, in most of the European countries, general practitioners are entitled with the task of regulating access of the specialists and have responsibilities over a per capita annual budget (Deom et al., 2010). In the United States, managed care has evolved as necessary principally because employers are facilitated with the opportunity of strengthening the health insurance premiums, as compared to the struggles faced by the employers in terms of unaffordable excesses due to the uncontrolled delivery of services. In the insurance system that has existed before the managed care, insurance companies are recognized to overlook the need for any incentive for managing different aspects that included service delivery and payments related to the same. In this respect, due to the lack of controls in factors such as over delivery and payment, it has been identified that the employers had to face the issue relating to costs. Subsequently, a system is needed to be developed with the aim of controlling excessive costs by integrating delivery as well as payment with functions relating to financing along with insurance. The integration of the different functions related to health care service could also be accomplished with the development of managed care (Deom et al., 2010). In this regard, the traditional insurance system has been identified as abandoned by the employers and accordingly, the employers have adopted managed care with the intention of minimizing insurance costs. In addition, the employers, with the implementation of managed care, have been able to avail the opportunity of having effective buying power as compared to physicians as well as hospitals. With the development of managed care, the health insurance providers perceived the domain as a threat to their earnings as well as independence. In contrast, the workers who used to have freedom in terms of choices are now having certain restrictions to their choices of health insurance services. Subsequently, the existence of threats and restrictions has been recognized as a “managed care backlash”. In this regard, the rise of opposition from the end of physicians along with consumers has been an important concern for the health care system in the United States. Moreover, due to increased guidelines implemented by the policymakers in the 1990s, Managed Care Organizations (MCOs) have been obligated to have effective controls on the payment and utilization of the healthcare services. Managed care plan has also been provided in different forms owing to which, diversification can be witnessed in care plan. Correspondingly, the evolution of managed care has been identified as an important development in health care services, but with the rise of opposition against the plan, the system has also been ascertained to have limited controls over the management of health care costs. In this regard, a balance of power of the service providers between demand and supply, has led to the concept of organizational integration. With the reduction of the market power of the health service providers, the providers have been recognized to develop integrated organizations with hospitals for better sustainability. On the other hand, the managed care industry has absorbed weaker competitors and currently, the industry has merged with the providers in organizational integration. In this respect, the health care delivery landscape of the United States has radically transformed largely (Deom et al., 2010; Hellinger, 1998). Managed Care Managed care is recognized as an organized approach for providing wide-ranging health care services to enrolled members based on well-organized management of services as required by the members. Additionally, managed care has been an effective measure for providers in terms of price negotiation or payment arrangements. Managed care is based on two different contexts that include mechanism and MCO. Concerning its dimension of mechanism or process, managed care is a procedure in accordance with which, health care services are provided to the workers. In addition, mechanism is identified to have two features. First, it is related to integrating the functions of financing, delivery, insurance and payment within one organizational setting, and conduct formal regulation over utilization. Second, managed care is determined as MCO, which can be applicable in different forms. Managed care is ascertained as an organization providing health care services without the assistance of an insurance company to manage risk and managing payment without the use of a third-party administrator. In managed care, the premiums paid are based on negotiated contracts between employers and MCO. In this respect, a fixed premium per enrollee is identified to be based on all health care services mentioned in the contract. In addition, it must be noted that the premiums cannot be raised during the term of the contract. The MCO operates as an insurance company with due consideration of all the risks associated with a health care plan, which implies that the financial responsibilities in terms of total cost would not exceed the mentioned fixed premiums (Deom et al., 2010). Delivery and Payment in Managed Care An MCO is identified to operate through owned hospitals as well as outpatient clinics. These physicians are employed on the basis of self-recruitment process. In this regard, certain large MCOs have been employing physicians offering them with fixed salary or remuneration packages. MCOs are also providing services by developing alliances with hospitals and/or group practices. Most of the MCOs are also recognized to be providing medical services by developing contracts with clinics, physicians and hospitals operating in an independent manner. MCOs make payments through discounted fees, salaries and capitalization by forming payment arrangement with providers. The aforementioned payment arrangements have varying degree of risk sharing amongst the providers and the MCOs. Respectively, based on the risk sharing aspect, the burden on the providers increases and accordingly, they are needed to be cost-conscious and minimize unnecessary usage of health care services. In case of specialized services, the fee for a service is determined to be limited (Deom et al., 2010). Capitation is a mechanism of making payments based on a ‘fixed monthly fee per member’ to a provider. The health care services are mentioned under a particular segment of fee with the aim of ensuring that the risks associated in payment are transferred to the providers from the MCOs. Discounted fee arrangement is thus determined as a modified form of fee on the basis of services rendered. Based on services delivered, a provider is identified to make bill to a MCO for each of those services. However, the payment is made in accordance with a pre-negotiated schedule, which is recognized as a fee schedule. In discounted fee arrangement, the MCO has to bear the risk and can lower the costs by making payments at discounted rates. In addition, the providers can discount their regular fees in exchange of having a share in the business conducted by a MCO. Salary is the third procedure of making payments, which also has bonuses or withholding. Correspondingly, the salaries of providers are identified to be fixed. For instance, the salaries of a physician are based on a fixed payment structure and accordingly, on the basis of the performances of the physicians, bonuses are distributed. When concerning the aspect of economic value, the physicians are recognized to be paid with partial compensation. The remaining portion of the compensation is paid to the physicians in the later period based on certain performance standards. In this respect, a provider who is an employee of a MCO has to bear the risks, as those get transferred from the MCO (Deom et al., 2010). It is worth mentioning that cost containment is not a prime objective that managed care seeks to accomplish, as cost containment has been an important factor that has led to the growth of managed care. Managed care is identified to be based on certain features that include accountability towards quality and cost, cost containment, measurement of health outcomes and care quality, health promotion as well as disease prevention, resource consumption management, consumer education programs and quality improvement (Shi & Singh, 2011). For competent MCOs, it has been an opportunity to have the benefits of managed care for better sustainability of the health care services. In this respect, on the accomplishment of the desired objectives and development of appropriate standards, the quality of health care services is retained with the health care system (Deom et al., 2010). Impact on Cost Clinical practice is identified as strongly affected largely due to the cost-containment initiatives that are undertaken by the MCOs. Clinicians regarded costs to a minimum extent in their practices before the development of managed care. The ethical consideration under which, the clinicians are identified to be providing medical or health care services to the patients, irrespective of the healthcare costs associated with the same. In this regard, the fee-for-service payment system within the health care context has offered benefits to the doctors in terms of adequate fees on the basis of the services rendered. Managed care has been introduced in the United States by considering different factors that include costs and requirements for the delivery of care services. In this respect, the costs associated with managed care services have been identified to generate an opposing view amid public in terms of the effect that costs have on the quality of health care services. The providers of health care services have assumed the fact that a monotonic relationship between quality along with cost exists and accordingly, any change in cost are recognized to have a direct effect on quality. However, there are a certain percentage of health care services, which are unnecessary and are provided in an inappropriate manner. In common pediatric conditions, the relationship between quality of care and cost is identified to be inconsistent (Bergman & Homer, 1998). In this regard, the integration of managed care in the health care system has been an effective measure for the reduction of health care costs and accordingly, a causal relationship is determined as existing between costs and quality of care. Labor Secretary, Mr. Robert Reich stated that managed care has been an important development based on which companies are able to cut costs and minimize organizational expenses. In addition, the advent of managed care has led to intense changes in the compensation costs as observed in the current phenomenon (Hellinger, 1998). Traditional fee-for-service care and managed care arrangements are identified to be providing different benefits to the providers in terms of financial incentives. In fee-for-service programs, the providers are offered with financial reward on the basis of services delivered, as a billing code is generated in accordance with each unit of work. In this context, adequate reimbursement is generated having greater number of billing codes. Subsequently, the health care system of managed care can be an effective measure for high reimbursement through overutilization relating to resources of health care. On the other hand, it will be a problem if the margin of reimbursement is low. For instance, in the case of under fee-for-service Medicaid, the providers refuse to deliver the required care to the recipients of Medicaid when the levels of reimbursement are low. Contextually, certain financial arrangements are made under managed care, so that providers ensure excessive care, which are financially risky. Payment made for providers on the basis of salary as well as shared risk in accordance with capitation reward are also identified to be offering care services to a minimum extent owing to which, there is an underutilization of health care resources (Bergman & Homer, 1998). In order to have a better knowledge about a hospital-based managed care in terms of cost and quality of care, the below mentioned methods are needed to be addressed. Methods Analysis of the cost and quality of care in a hospital-based managed care, a CareMap as well as a nurse case manager has been considered. In the CareMap, a critical path for patient outcomes is recognized as vital for having a better understanding about the study. For the study, the sample population comprises women who have undergone cesarean treatment and are offered with care for a period of 18 months. In addition, participants for the sample consist of women at a tertiary-level university hospital in the maternity unit. In this respect, the study analyses length of stay as well as relating to costs associated with care post-cesarean delivery, quality of care as rated patients, and patients’ physical recovery by discharge and 1 month later by determining the impact of the analysis based on the comparison of the after group with the before group (Blegen, Reitera, Goodea, & Murphya, 1995). Results Based on the analysis, it can ascertained that average length of stay decreased to around 13.5% (0.7 days) and average costs decreased to around 13.1% ($518) in a hospital-based managed care. The decreases are identified as statistically relevant, as the results continued to be the same after the control made in the co-morbid and complicating conditions. Perception of the patients in relation to care quality has been ascertained as increasing from 4.26 to 4.41 on a 1–5 scale. In addition, the patients are determined to be having a positive view towards managed care as recognized from the augmented participation of the patients in having their required health care services. It has been also ascertained that the physical recovery scores obtained during the discharge of patients have no alteration (Blegen, Reitera, Goodea, & Murphya, 1995). It can therefore be concluded that a hospital-based managed care is an effective health care system based on which, the use of health services can be reduced, minimum length of stay and cost related to hospital care. In this respect, the system is also determined as important for maintaining as well as improving care quality to a large extent. The effects of the system in other conditions should be determined in terms of reproducible and generalizable in future studies. In addition, the implications of the duration of the conditions should also be examined (Blegen, Reitera, Goodea, & Murphya, 1995). References Bergman, D. A., & Homer, C. J. (1998). Managed care and the quality of children’s health services. The Future of Children Children and Managed Health Care, 8(2), 60-75. Blegen, M. A., Reitera, R. A., Goodea, C. J., & Murphya, R. R. (1995). Outcomes of hospital-based managed care: A multivariate analysis of cost and quality. Obstetrics & Gynecology, 86(5), 809-814. Deom, M., Agoritsas, T., Bovier, P. A., & Perneger, T. V. (2010). What doctors think about the impact of managed care tools on quality of care, costs, autonomy, and relations with patients. BMC Health Serv Res, 10(331), 1-8. Hellinger, F. J. (1998). The effect of managed care on quality a review of recent evidence. JAMA Internal Medicine, 158(8), 833-841. Kaiser Family Foundation. (2014). Employer health benefits. Retrieved from http://files.kff.org/attachment/2014-employer-health-benefits-survey-full-report Shi, L., & Singh, D. A. (2011). Delivering health care in America. USA: Jones & Bartlett Publishers. Read More