Managed care

 a system of providing health care (as by an HMO or a PPO) that is

designed to control costs through managed programs in which the
physician accepts constraints on the amount charged for medical care
and the patient is limited in the choice of a physician
 Managed Care is a health care delivery system organized to manage
cost, utilization, and quality. Medicaid managed care provides for the
delivery of Medicaid health benefits and additional services through
contracted arrangements between state Medicaid agencies and
managed care organizations (MCOs) that accept a set per member per
month (capitation) payment for these services By contracting with
various types of MCOs to deliver Medicaid program health care
services to their beneficiaries, states can reduce Medicaid program
costs and better manage utilization of health services. Improvement in
health plan performance, health care quality, and outcomes are key
objectives of Medicaid managed care.

 Some states are implementing a range of initiatives to coordinate and

integrate care beyond traditional managed care. These initiatives are
focused on improving care for populations with chronic and complex
conditions, aligning payment incentives with performance goals, and
building in accountability for high quality care
 Managed care has largely replaced traditional medical indemnity
insurance plans, under which payment is automatic and oversight
procedures are minimal. Under managed care, the third-party payer
controls specialty referrals, chiefly by appointing primary care physicians
as "gatekeepers"; restricts the scope of covered services (particularly
diagnostic procedures, choice of drugs prescribed, and length of hospital
stay) for each diagnosis; and requires precertification review before
hospital admission and a second opinion before elective surgery.
Standards of care are regulated by practice guidelines, which may be set
forth in oversimplified algorithms featuring binary (yes/no) choices.
Prescribing alternatives are typically limited to drugs listed in the plan's
formulary. Practice guidelines, formulary choices, and other policies
affecting patient care incorporate contemporary medical knowledge and
professional standards but also strongly reflect strategies for loss control
and for the even distribution of actuarial risk among all beneficiaries. The
plan may bargain with physicians, hospitals, diagnostic laboratories, and
pharmacies for wholesale prices, or may compensate providers by
capitation (that is, a flat annual fee based on the number of covered or
potential patients) rather than by fees for services. Managed care
organizations typically employ cost-containment measures such as
emphasis on preventive medicine, audits of medical records, intensive
review of claims, and punitive action against noncompliant providers.
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 managed care
(1) The co-ordination of a constellation of health services, encompassing early
intervention to control price, volume, delivery site and intensity of health
services provided, to maximise the health of the insured, as well as the value
of health benefits given.
(2) A philosophy in which the goal is a system that delivers quality, cost-
effective healthcare by monitoring and recommending utilisation of services,
as well as controlling the cost of those services.
.

Types of managed care organizations

 What are Managed Care Organiziations?
What exactly is managed care? The National Library of Medicine, defines managed
care as programs or organizations “intended to reduce unnecessary health care costs
through a variety of mechanisms, including: economic incentives for physicians and
patients to select less costly forms of care; programs for reviewing the medical
necessity of specific services; increased beneficiary cost sharing; controls on inpatient
admissions and lengths of stay; the establishment of cost-sharing incentives for
outpatient surgery; selective contracting with health care providers; and the intensive
management of high-cost health care cases".
In a shorter version, managed care organizations are about two things: health
insurance and delivery of health care at low cost.

 Types of Managed Care Organizations

There are several types of managed care organizations, which will be discussed
below.
.Health Maintenance Organization, or HMO: This is the first form of managed
care. The Health Maintenance Organization Act passed in early 1970s had led to the
rapid growth of HMOs. HMOs refer to organizations in which physicians, hospitals,
and insurance plans are either closely affiliated or in the same organization. Kaiser
Permanente is a prime example of HMO. An HMO owns the hospitals, and pay the
doctors by salaries (with performance bonuses, of course). Unless in the case of
emergency, patients in an HMO plan have to use the plan-affiliated care provider.
One of the advantages of HMO plans is that they have a fixed amount of money to
spend on medical care of the enrollee. This enables strict cost control and motivates
patients and physicians to choose the more cost-effective treatment or drug. Thus, you
pay less for an HMO plan in comparison to other plans. However, this is also one of
the disadvantages of being HMO enrollees. HMO plans notoriously promote cost
control over quality of care.
.Fee-for-Service, or FFS: In fee-for-service plans, patients have the most freedom.
They can choose any doctor or health care provider they want. Physicians receive a
fee for each and every service, including visit, procedure, test, etc. Freedom of course
comes with higher cost and patients in an FFS plan tend to pay significantly more.
 .Independent Practice Association, or IPA: In an Independent Practice Association,
physicians work independently. They can have patients from both FFS plans and
HMO plans.
.Preferred Provider Organization, or PPO: Physicians provide care at lower rate in
exchange for more patients directed towards them. This benefits both ways, patients
get better care and better freedom for their bucks (presumably) and physicians get
more business.
.Point of Service Plans, or POS. POS is similar to HMO in many aspects as there is
a capitation arrangement with providers for their enrollees. The difference is that
doctors do not have to work in specified hospitals. Doctors receive compensation
based on per patient per year. Patients in a POS plan are encouraged to use POS
doctors since they have to pay out-of-pocket for doctors not in the plan

Four Basic Techniques of Utilization Management

Utilization management began as a way for health care organizations and

professionals to evaluate the effectiveness and efficiency of the services
they provide to patients. The approach has grown and become more
rooted in theory, and utilization management now is applied to businesses
of all sizes. It helps evaluate new business activities and decisions and
describes the proactive planning, initiation and review of products and
services.

1.Demand Management

Demand management is concerned with the planning processes used to

manage the demand for a company's products or services. Demand
management is concerned with keeping the company as profitable and
efficient as possible. This means not producing more or less than the ideal
customer demand. Forecasting demand can be particularly tricky for
small businesses that may seem demand increase or decrease dramatically
from month to month; however, open communication with existing
clients and keeping a close eye on market trends can help in leveling
production.

2.Utilization Review

In this process, managers take a proactive approach to the management of

their customers and of the products and services they sell. This means
both planning ahead and being cognizant of changes that must be made to
a company's marketing and customer service strategies. In the health care
field, this often means adjusting levels of patient care depending on need.
 In the visual arts, it is often about showcasing the newest or trendiest
artist to the most demanding patrons.

3.Case Management

A distinctly social sciences idea, case management is about treating each

client or customer as unique and individual. A case manager in a hospital,
for instance, looks at a patient's files and helps that patient decide on care
options and financial matters. In a traditional business, case management
often is linked to marketing. Finding a niche market or an ideal
demographic is a means of case management, as is dealing individually
with customer complaints and customer service issues.

4.Disease Management

This idea comes primarily from the health care industry, but it can be
applied to businesses in general. Just as a hospital or clinic may want to
research and understand the diseases that affect the general population,
businesses ought to be concerned with the economic and social issues that
can affect the performance of the business. Things such as a downturn in
the market, the entrance of a new competitor or a decline in demand for a
product can all be forms of "disease" that a business must watch out for
and put contingency plans in place to deal with should they arise.

The Key Players In The

Healthcare
.

There are four main constituents in the medical industry:

1. Patients - individuals who receive medical care from providers

2. Providers - Institutions that provide care to patients, charge payers for that care, and buy
products from vendors
3. Payers - Institutions that pay providers for healthcare services, which includes insurance
carriers, private employers, the government, and also individuals
4. Vendors - Sell medical devices, pharmaceutical products, services and solutions to
providers

There are certainly other important constituents, such as pharmacy benefits managers
(PBMs) or benefits managers, but these four groups are the tent poles that define the
healthcare industry. In particular, the interaction between patients, providers and payers,
the 3 Ps as I call them, is most important (vendors are pretty straight forward in that they
sell things directly to providers)

Looking at each category in more detail:

Payers
The majority of healthcare in the US is paid for by two entities, employers and the
government. Today, about 60% of Americans get their healthcare from their
employer. Under employer-paid plans, employees may be required to contribute part of
the cost of insurance while the employer is responsible for choosing the insurance carrier
and negotiating plans and premiums. The government on the other hand covers about
33% of Americans through two main programs, Medicare and Medicaid. Medicare is a
federal program that provides health coverage if you are age 65 or older, or have a severe
disability, regardless of income. Medicaid is a joint federal and state program that helps
with medical costs for people with limited income and resources.

While employers and the government bear almost all of the cost in the system, the actual
"payment" often takes place through insurance companies. Insurers cover thousands or
even millions of lives so that they are able to negotiate with healthcare providers for
reduced fees and then pay for services. The four largest insurers are UnitedHealth,
Kaiser, Wellpoint and Aetna.

Providers
Healthcare providers can be individual practitioners and small groups (i.e. primary and
specialty care physicians), but most of our healthcare happens in larger hospitals and
health systems. In terms of hospitals, there are non-profits (58% of all hospitals), for-
profits (21% of all hospitals), and government (21% of all hospitals). We can also think
about "provider networks" which include Health Maintenance Organizations (HMOs) and
Preferred Provider Organizations (PPOs). HMOs like Kaiser are closed networks that
won't accept out-of-network care unless in an emergency, and they act as both an insurer
and a care provider. PPOs are stitched together networks that offer consumers more
choice. Under Aetna's PPO, you pay less if you go to a provider in Aetna's PPO network,
but you can go out-of-network if you want.

Patients
Patients are less complicated than payers and providers and so we won't go into much
detail here. Patients are generally insured through their employer or the government,
though they sometimes pay for coverage themselves. There are also many uninsured
citizens in the US but that is quickly changing with The Affordable Care Act

Vendors