The Advantages and Disadvantages of Managed Care
1. Introduction
Managed care is a rapidly growing area of the health care industry. Also known as managed health care, it is a system of delivery and financing of health care services. Managed care organizations (MCOs) provide a variety of services to patients, including preventive care, diagnostic testing, and treatment for acute and chronic conditions.
MCOs contracts with health care providers, such as physicians, hospitals, and other health care professionals, to provide services to patients at a predetermined price. The MCO then pays the provider for the services rendered. MCOs may also contract with managed care firms to provide services such as utilization review and case management.
Utilization review is the process of evaluating the appropriateness of medical procedures and tests ordered by physicians. Case management is the coordination of services among the various health care providers involved in a patient’s care.
Medicaid is a government program that pays for medical care for certain low-income people and families. Medicaid is jointly funded by the federal government and the states. In most states, Medicaid is administered by state governments.
Medicaid covers a wide range of medical services, including inpatient and outpatient hospital care, physician services, lab tests and x-rays, home health care, nursing home care, and some prescription drugs. Medicaid also pays for preventive services such as immunizations and screenings for cancer and other diseases.
Medicare is a federal program that pays for medical care for certain people who are 65 years of age or older, or who have certain disabilities. Medicare is funded by the federal government through payroll taxes paid by workers and employers.
Medicare covers a wide range of medical services, including inpatient and outpatient hospital care, physician services, lab tests and x-rays, home health care, hospice care, and some prescription drugs. Medicare also pays for preventive services such as immunizations and screenings for cancer and other diseases.
2. What is managed care?
Managed care is an approach to health care delivery that attempts to manage cost, utilization, and quality of health care services delivered to members enrolled in a health plan. The key elements of managed care include:
• Preventive Care: Promotion of good health through such means as immunizations, screenings, risk factor reduction counseling (e.g., smoking cessation), and wellness programs
• acute Care: Timely diagnosis and treatment of illness or injury
• Chronic Care: Management of chronic conditions such as diabetes or congestive heart failure
• Coordination of Care: Facilitation of communication among all members of the patient’s healthcare team
• Health Education: Provision of information on how to maintain good health and make healthy lifestyle choices
The goals of managed care are to improve quality of care while reducing costs. To achieve these goals, managedcare plans typically use one or more of the following strategies:
• Selective Contracting: Negotiating discounts with providers who agree to meet certain standards for quality or cost-effectiveness; this may include using preferred provider organizations (PPOs), which are networks of carefully selected providers who agree to provide uninsured members with service at a discounted rate
• Gatekeeping: Requiring members to see a primary care physician (PCP) for all but the most serious health problems; the PCP then decides whether to refer the member to a specialist
• Case Management: Assigning a case manager to coordinate care for members with chronic or complex health problems
• Utilization Review: Monitoring utilization of services to ensure that they are medically necessary and cost-effective
• Disease Management: Implementing programs to improve outcomes for members with chronic diseases such as diabetes or congestive heart failure
3. The scope of managed care
Managed care techniques were first developed in the 1960s as a way to control costs in the fee-for-service system of health care delivery. In the 1980s, managed care plans began to be offered as an alternative to fee-for-service insurance. Today, managed care is the predominant type of health insurance in the United States.
Most managed care plans are organized around one of two models:
• Preferred provider organizations (PPOs): PPOs are networks of carefully selected providers who agree to provide uninsured members with service at a discounted rate. PPOs contracts with providers, such as hospitals, physicians, and other health care professionals, to provide services to patients at a predetermined price.
• Health maintenance organizations (HMOs): HMOs are prepaid health plans that provide comprehensive health care services to members for a fixed monthly fee. HMOs contracts with providers, such as hospitals, physicians, and other health care professionals, to provide services to members at a predetermined price.
In both PPOs and HMOs, providers are paid a fixed fee for each patient visit or service. This fee is usually lower than the fee that would be paid under fee-for-service insurance. As a result, managed care plans typically cost less than fee-for-service plans.
4. Services provided by managed care organizations
Managed care organizations (MCOs) provide a variety of services to patients, including preventive care, diagnostic testing, and treatment for acute and chronic conditions. MCOs contracts with health care providers, such as physicians, hospitals, and other health care professionals, to provide services to patients at a predetermined price. MCOs may also contract with managed care firms to provide services such as utilization review and case management.
Preventive Care: MCOs provide preventive care services, such as screenings for cancer and other diseases, immunizations, and risk factor reduction counseling (e.g., smoking cessation), to help members maintain good health and avoid serious illness.
Diagnostic Testing: MCOs provide diagnostic testing services, such as x-rays and lab tests, to help members obtain an accurate diagnosis of their condition. These services may be performed by MCO staff or contracted providers.
Treatment: MCOs provide treatment services, such as surgery and medications, to help members recover from illness or injury. These services may be performed by MCO staff or contracted providers.
Chronic Care Management: MCOs provide chronic care management services, such as disease management programs and home health visits, to help members manage chronic conditions such as diabetes or congestive heart failure. These services may be performed by MCO staff or contracted providers.
5. Medicaid and managed care
Medicaid is a government program that pays for medical care for certain low-income people and families. Medicaid is jointly funded by the federal government and the states. In most states, Medicaid is administered by state governments.
Medicaid covers a wide range of medical services, including inpatient and outpatient hospital care, physician services, lab tests and x-rays, home health care, nursing home care, and some prescription drugs. Medicaid also pays for preventive services such as immunizations and screenings for cancer and other diseases.
In recent years, many states have implemented managed care programs for Medicaid beneficiaries. Under managed care, Medicaid beneficiaries are enrolled in a health plan that contracts with Medicaid to provide health care services. Managed care plans may be either HMOs or PPOs.
The advantages of managed care for Medicaid beneficiaries include:
• Improved access to care: Managed care plans usually provide their members with a primary care physician (PCP) who coordinates all of their medical care. This can help members get the care they need in a timely manner.
• Improved quality of care: Managed care plans are required to meet certain standards for quality of care. This can help ensure that members receive high-quality care.
• Cost savings: Managed care plans typically cost less than traditional fee-for-service Medicaid. This can help save money for both the state and federal government.
The disadvantages of managed care for Medicaid beneficiaries include:
• restricted choice of providers: Managed care plans typically have a limited network of providers who have agreed to provide services at a discounted rate. This can restrict members’ choice of providers.
• increased bureaucracy: Managed care plans often require prior approval from the plan before members can receive certain services. This can add bureaucracy and delay members’ access to care.
6. Medicare and managed care
Medicare is a federal program that pays for medical care for certain people who are 65 years of age or older, or who have certain disabilities. Medicare is funded by the federal government through payroll taxes paid by workers and employers.
Medicare covers a wide range of medical services, including inpatient and outpatient hospital care, physician services, lab tests and x-rays, home health care, hospice care, and some prescription drugs. Medicare also pays for preventive services such as immunizations and screenings for cancer and other diseases.
In recent years, many Medicare beneficiaries have enrolled in managed care plans, such as HMOs and PPOs. Under managed care, Medicare beneficiaries are enrolled in a health plan that contracts with Medicare to provide health care services.
The advantages of managed care for Medicare beneficiaries include:
• Improved access to care: Managed care plans usually provide their members with a primary care physician (PCP) who coordinates all of their medical care. This can help members get the care they need in a timely manner.
• Improved quality of care: Managed care plans are required to meet certain standards for quality of care. This can help ensure that members receive high-quality care.
• Cost savings: Managed care plans typically cost less than traditional fee-for-service Medicare. This can help save money for both the federal government and Medicare beneficiaries.
The disadvantages of managed