1.
Running Head: MANAGED CARE PAYMENT MECHANISM
Managed Care
Payment
Mechanisms
Managed Care and
Integrated Organizations
Managed Care within Health Care covers a variety
of information from nursing homes, policies,
Medical, Medicare, out of pocket, and partial
payment, management, contracts, government, and
the Social Security State Fund. Within this
working paper I will discuss a few of these
mechanisms that are applied and utilized within
‘Managed Care’ today. A system within a system
that brings in 25% of the United States debt.
Tunisia I.E. Al-Salahuddin RMT/BSHS/MS
4/12/2016

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MANAGED CARE PAYMENT MECHANISM
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CONTENT
Introduction……………………………………………………………………………….Pg. 2
Medicaid/Medicare………………………………………………………………………..Pg. 3
Out of Pocket Expense…………………………………………………………………….Pg. 4
PPO…………………………………………………………………………………………Pg. 5
Conclusion………………………………………………………………………………….Pg. 6
References…………………………………………………………………………………..Pg. 7

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MANAGED CARE PAYMENT MECHANISM
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Introduction
Integrated Organizations in Health Care today us a combination of services and systems to
keep the health care industry running properly. When you think of health care you would
assume it is just Doctors, Patients, and insurance companies. The management of the system of
health care covers an array of services, department, Medicaid, Medicare, partial payments, out of
pocket expenses, government agencies, and complex policies. This is the system within a system
of health care and utilization. Many of the mechanisms like how a person pays governs the type
of care, the quality of care, and how much care will be given to that patient when they obtain
services. Due to the reconstruct of the entire health care system things have substantially change
for the better with a few changes that many are not fond of .
The Obama Care and the Affordable Health Care Act have made it easier for anyone to obtain
and receive health care benefits, but with a few major cut backs. The patient that receives
benefits now has to do their part to cut cost in care to relive the deficit in cost. According to
Mary A. Laschober a UMI author, “Insurance plans, which should feel the burden of more
expensive claims, have also not had strong incentive to internalize the cost of health services. For
several reasons, insurers have been able to pass costs on to consumers. First, because premium
increases are spread among a large group, each person's 1 Reproduced with permission of the
copyright owner. Further reproduction prohibited without permission. benefit of consuming
additional services almost always outweighs the increase in her share of the costs” (1996,
Laschober). In this discussion essay I will speak on the three forms of common payments that
are used in the United States Health Care System today as instruments to ensure billing and
payments are collected properly.

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MANAGED CARE PAYMENT MECHANISM
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Managed Care Payment Mechanism
Medicare/Medicaid/
In the health care industry Medicare/Medicaid payments are big business and bring in
millions each day. The debt that was created by the Medicare/Medicaid payment system has
accounted for a substantial amount of health care debt within the United States. Medicare and
Medicaid are regulated by the United States Social Security State Fund which may be depleted
by 2031 or sooner. The majority of patients that utilize the State Fund system are elderly,
women & children, and disabled people. “Medicare is our country’s health insurance program
for people age 65 or older. People younger than age 65 with certain disabilities or permanent
kidney failure can also qualify for Medicare. The program helps with the cost of health care, but
it doesn’t cover all medical expenses or the cost of most long-term care. You have choices for
how you get Medicare coverage. If you choose to have original Medicare coverage, you may buy
a Medicare supplement policy (called Medigap) from a private insurance company to cover some
of the costs that Medicare does not” (2016, SS). The younger generation also can use Medical in
the state of California which is the norm for mothers and children whom receive WIC and Food
Stamps.
When patients use their Medicare/Medical/Medicaid cards the information goes to an
authorization department called patient billing where medical billers & Coders send
authorization to the state of California. “Administrative costs account for 25 percent of total U.S.
hospital spending, according to a new study that compares these costs across eight nations. The
United States had the highest administrative costs; Scotland and Canada had the lowest.
Reducing U.S. per capita spending for hospital administration to Scottish or Canadian levels

5.
MANAGED CARE PAYMENT MECHANISM
4
would have saved more than $150 billion in 2011” (2016, CWF). Even though the billing cost
within the administration department is still high billing is the one department that you do not
want to cut the cost in based on the need for accurate and fast medical billers. This department
deals with the financials of the entire system as a whole but the mechanisms of collection work
to collect needed funds due to the demand of debt solution. If you do not have proper collectors
within the hospitals and state offices the health care system will collapse due to no collected
funds.
Out of Pocket Expense
Out of pocket expenses affect many whom have private insurance coverage, Medicaid,
Medicare, and Medical. Many whom go to the doctors will accrue out of pocket expenses or
what they call a co-payment. These payments are usually a percentage for medicine and also
doctors’ visits that range from the price of $10 dollars per visit to $30 dollars per visit. “The
prevalence of high OOP costs is growing most rapidly among fully insured nonelderly families-
those in which all members have coverage throughout the year. As of 2001-02, nearly 10 million
people in such families had expenses that were high relative to income. But fully insured families
have seen a larger proportional increase, because their uncovered costs are rising faster than
income” (2006, ProQuest). The rising cost of co-payment is part of the new booming economy
the more money a person makes the more they will have to pay out of pocket. The mechanism of
out of pocket often creates other burdens when the patient cannot pay the expense the debt
usually goes to collections which create another problem entirely.

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MANAGED CARE PAYMENT MECHANISM
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PPO Preferred Provider Organizations
The PPO plans that many people chose during open enrollment are plans that are usually
chosen by patients that need non primary care or specialist. These specialist are usually plastic
surgery, dentist, cancer treatment, or treatment for other illnesses that are not covered by regular
doctors. “a preferred provider organization (PPO) have several differences such as which doctors
patients can see, how much services cost, and how medical records are kept. The most significant
difference between the two organizations is the option to select health care providers. As its
name implies, a preferred provider organization allows a patient to select any health care
provider, inside or outside of the network, while a health maintenance organization usually
requires a patient to select a primary care provider who can give referrals to other medical
specialists” (2003, WiseGeek). Many whom live in a higher income bracket have PPO doctors
based off their income and the privacy that they obtain by using these doctors.
Back in 2006 Worcester County in Massachusetts became one of the many counties within
the United States that has made the option of having a PPO for their elderly whom use Medicare
services more commonly available. “Fallon Community Health Plan of Worcester said it expects
to launch Fallon Senior Plan Preferred on July 1, and Blue Cross and Blue Shield of
Massachusetts and Tufts Health Plan said they would launch Medicare PPO plans on Sept. 1.
The new plans are being launched as the federal Centers for Medicare and Medicaid Services, or
CMS, nears the 2006 launch of a restructured Medicare health plan for seniors and the disabled”
(2005, Eckelbecker). This is a breakthrough for the elderly considering they need more services
and specialist at they get older. This will also be an advantage for PPO providers to reach out to a
border group of people that need care and services.

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MANAGED CARE PAYMENT MECHANISM
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Conclusion
From PPO, Out of Pocket Expenses, and Medicaid/Medical the mechanism of payment
collection for the care of the patients is what keeps the system of payment solution going.
Patients will not obtain proper care unless the money is collected distributed and funded back
into the system of health care. Each department is vital to the mechanism of health care solution
and the dynamics of the hospital including the administrative aspect of management. During the
coming years many politicians want to down size in the administrative departments including
billing which would be not such an astute decision considering the billing departments bring in
the majority of the revenue that is needed for the health care machine to run properly. Billing
which includes the three forms of payments mechanisms that I discussed within this essay report
gives a small glimpse into a bigger system of payment and how payment systems work and
operate.

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References
Eckelbecker, L. (2005, Jun 09). Health firms set to offer PPO plans; managed care expanding to
serve medicare recipients. Telegram & Gazette Retrieved from
https://csuglobal.idm.oclc.org/login?url=http://search.proquest.com.csuglobal.idm.oclc.or
g/docview/268931714?accountid=38569
Laschober, M. A. (1996). Principal-agent, risk, and market structure effects on health
maintenance organization choice of payment method for primary care physicians (Order
No. 9702575). Available from ProQuest Dissertations & Theses Global. (304247343).
Retrievedfromhttps://csuglobal.idm.oclc.org/login?url=http://search.proquest.com.csuglo
bal.idm.oclc.org/docview/304247343?accountid=38569
Rising out-of-pocket spending for medical care: A growing strain on family budgets.
(2006). Medical Benefits, 23(5), 2-3. Retrieved from
https://csuglobal.idm.oclc.org/login?url=http://search.proquest.com.csuglobal.idm.oclc.or
g/docview/207203119?accountid=38569
Social Security. (2016). Social Security Medicare. Retrieved April 12, 2016, from
https://www.ssa.gov/pubs/EN-05-10043.pdf
The Commonwealth Fund. (2016.). A Comparison of Hospital Administrative Costs in Eight
Nations: U.S. Costs Exceed All Others by Far. Retrieved April 12, 2016, from
http://www.commonwealthfund.org/publications/in-the-literature/2014/sep/hospital-
administrative-costs
W. G. (2016). What is the Difference Between a HMO and PPO? Retrieved April 12, 2016, from
http://www.wisegeekhealth.com/what-is-the-difference-between-a-hmo-and-ppo.htm