Chapter 7 Managed Care

1. MANAGED CARE
Chapter 7

2. • 2008-Healthcare spending
accounted for 16.2% of GDP
compared to 5.2% in 1960
• Largest single sector in American
economy
• 2 aspects of healthcare:
organizational changes and
financing tied to the desire to
contain costs and improve
efficiency of hc delivery and
coordination of care
INTRODUCTION

3. • Why did group medical practice
become inviting for solo
practitioners?
• Shared space, supporting staff,
practice income, practice
expenditures, and medical work
• Engage allied health personnel,
coverage responsibilities shared,
ability to take vacations/attend
conferences, ability to consult with
one another
INTRODUCTION

4. Definition: 3 or more physicians
formally organized as a legal entity in
which all records, personnel and
facilities are shared; profits distributed
according to a pre-arranged plan
• Pre-paid GP started off with
capitation and indemnity insurance
• Resistance from organized
medicine-distorted contracts, made
docs wage slave, interfered with
medical judgment
PRIVATE
GROUP
MEDICAL
PRACTICE

5. • 2 major group of Pre-paid Group
Practice: staff-physicians work for
the PGP Organization on a salaried
basis
• Group Model-join together to form
their own company-it contracts
with a financing/administrative
entity that sells the prepaid
healthcare coverage package to
beneficiaries or their employers
INTRODUCTION

6. • For Physicians: Share knowledge and
responsibility, regular work schedule,
time to complete CE, malpractice
insurance
• For Patients: no or low charges at time
of service, 24 hr, 7-day week service,
continuity of care
• Some disadvantages for patient were:
less choice, impersonality, clinic
atmosphere, locational inconvenience
• Potential for improving
medicine/population health
• Kaiser and HIP (Health Insurance Plan)
BENEFITS/OPP
ORTUNITIES
OF PGPS

7. • Organization either for-profit or
nonprofit that accepts responsibility for
providing and delivering a pre-
determined set of health maintenance
and treatment services to a voluntarily
enrolled population for pre-negotiated
and fixed periodic premium payment.
• Shares financial risks and delivery risks
associated with providing
comprehensive medical services
• 1990s-newer version of HMO-closed
panel HMO-Staff model-limited number
of providers employed by HMO
HMOS

8. • Group model-HMO contracts with single
multi-specialty medical group to provide
care to HMO’s membership-group practice
may work exclusively with HMO or it may
also provide services to non-HMO patients
• IPA-independent physicians that maintain
own offices, but band together for the
purpose of contracting their services to
HMOs, PPOs or other insurance companies
• Network Model-HMO model that contracts
with multiple physicians groups to provide
services to HMO members
• Mixed-more than one model listed above
HMOS

9. • Major difference between group and
staff model HMO’s:
• Staff is closed model, while IPA is open
as long as the physician can meet
qualifications
• 1990s/into 21st Century: intro. To POS
plans-use non-plan providers for an
additional fee, cooperation between
BCBS and HMOs, acceptance of
Worker’s Comp cases, and expansion of
health promotion/disease prevention
programs.
HMOS

10. • P. 219
• Managed Care: favorably affects the
price of services, , the site at which the
services are received, or their utilization
-maximize value, including a concern
with quality and access
• Common techniques: precertification
for hospitalization
• Case Management
• P. 222-Forms of MCOs
MANAGED
CARE

11. • Private corporations figured out how
they could appropriate for themselves
the monetary surpluses generated by
the US Healthcare delivery system that
had typically gone to physicians-the
method that helped was UM-utilization
management-cost containment method
used to look at review of procedures
(service planning) and mandate
approval prior to proceeding
WHY
MANAGED
CARE
DEVELOPED
WHEN IT DID

12. • As of 2006, 93% of Americans who had
heath insurance were enrolled in an MCO
through employer
• The PPO has become the most frequent
type of HIP for insured workers
• Fee-for-service private practice gradually
disappearing
• IDS-Integrated Delivery System-network of
hc organizations that provide a
coordinated continuum of care to a
defined population, and is willing to be
clinically and fiscally responsible for the
outcomes and health status of the
population
• Ideal healthcare system-
• Does MCO harm the relationship between
physician and patient?
MANAGED
CARE TODAY

13. HOW DO MANAGED
CARE PLANS
INFLUENCE
PHYSICIANS’
PRACTICE
BEHAVIOR?

14. • Clinical rules - treatment
protocols, algorithms,
practice guidelines,
regulations, administrative
constraints, utilization review
• Incentives - Reimbursement
through per capita,
discounted fee schedules,
bonuses, etc.
ANSWER:

15. PERCENTAGE
OF ALL
COVERED
WORKERS BY
TYPE OF PLAN
1996-2002
27%
31%
28%
14%
14%
27%
35%
24%
8%
29%
41%
22%
5%
26%
52%
17%
0%
10%
20%
30%
40%
50%
60%
1996 1998 2000 2002
Conventional
HMO
PPO
POS

16. • Plans have a significant impact on use
and costs of service, although this may
not result in lower system-wide costs
• A survey of 2,409 employers found that
respondents spent 14.7% less per
employee for HMO coverage than the
average cost per employee of
traditional indemnity plans
• The average cost per employee for care
delivered through PPOs was 6.1% below
that of indemnity plans
• The average cost per employee of point-
of-service plans was 7.9% lower than
traditional indemnity plans
DO MANAGED
HEALTH CARE
PLANS
REDUCE
HEALTHCARE
COSTS?

17. • Studies have shown that elderly, poor
and chronically ill patients have worse
physical outcomes under Managed care
• Hospitals under managed care plans
more frequently deny admission or
prematurely discharge mentally ill
patients
• HMOs frequently limit access to
National Cancer Centers and enrollment
in clinical trials of experimental cancer
treatments
HOW DO
MANAGED
CARE PLANS
AFFECT
QUALITY OF
CARE?

18. • Less over-treatment
• More preventive care
• Lower cost
• Minimal paperwork
• Low or no co-payment and deductibles
POTENTIAL
BENEFITS
PATIENTS

19. • Lower practice start-up costs
• Dependable income
• Regular hours
• Structured practice
• Incentives for cost-effective care
• Assured patients
POTENTIAL
BENEFITS
PHYSICIANS

20. • Lower health care costs
• More predictable costs
• Use of business management practices
(e.g., CQI)
POTENTIAL
BENEFITS
PAYERS

21. • Incomprehensible benefit plans
• Limits on specialty services,
hospitalization, etc.
• Physician is no longer the patient’s
advocate
POTENTIAL
BURDENS
PATIENTS

22. • Physician’s role is changed to that of a
business-person
• The physician is less responsive to the
patient’s needs
• Physicians lose clinical autonomy in
ordering tests, treatment,
hospitalization, etc.
POTENTIAL
BURDENS
PHYSICIANS

23. • Complex health care plans
• Inadequate data concerning outcomes,
quality of care
• Concerns about price-fixing,
monopolization
• Uncertainty concerning liability
POTENTIAL
BURDENS
PAYERS

24. Choice
Cost
Quality
CONFLICTS

25. • The brain tumor of a 5-year old Florida
girl was repeatedly misdiagnosed as the
flu until her mother took her to a facility
outside the HMO - which refused to pay
for the surgery resulting from the
correct diagnosis.
• Long Island Jewish Hospital in Queens
replaced private doctors in its
anesthesia department with lower-paid
and less-experienced salaried physicians,
and in one 10-week period four patients
died from anesthesia-related
complications after successful surgery.
• A California HMO was fined $500,000 by
the state for refusing to refer a young
girl to a specialist for her Wilm's tumor
and instead assigning a physician who
had never operated on children or on a
Wilm's tumor.
PHYSICIAN-
PATIENT
CONFLICTS

26. • Some 55 percent said they have either
never heard the term "managed care"
or didn't have a good understanding of
what it means.
• Nearly one-third said they have never
heard the term "health maintenance
organization" -- or had heard it but
didn't know its meaning.
• Only 52 percent knew that HMOs put
emphasis on preventive care.
• One in three who knew what HMOs
were didn't know that they provide
coverage for set monthly fees.
• Moreover, one in four in an HMO didn't
know that their choice of physicians
was limited.
PUBLIC
MISUNDERSTANDING
OF HMOS

27. • Casale studied 4,000 heart attack
patients admitted to Pennsylvania
hospitals in 1993.
• He found HMO patients are less likely to
receive two surgical procedures
common after heart attacks -- heart
catheterization and angioplasty.
• However, Casale's study did not have
data on how long patients waited to get
care -- considered the best predictor of
heart attack survival rates.
• But Casale notes that HMO policies
discouraging emergency room use could
have delayed patients seeking
treatment.
HEART
ATTACK
DEATH RATE
HIGHER IN
HMOS

28. How much control over access to specialized care
and clinical decisions should the managers of
managed care be able to exercise?
How much autonomy should physicians have in:
• Setting fees?
• Ordering diagnostic procedures?
• Referral of patients to specialists?
• Ordering hospitalization?
• Enrolling patients in experimental therapies?
QUESTIONS