Managed Care History and the Current Status, Essay Example

Managed Health Care is a structure or system of health care that was developed in order to control costs and increase the quality of care to individuals through provider networks. Basically, managed care can be translated to money following the patient. Traditionally, in managed care plans, the patient chooses a health care provider and uses the provider if they choose so. The providers are then able to bill the insurance company and are reimbursed for their service, along with patient obligations, such as co-pay or co-insurance. This type of managed care plan is currently disappearing in the United States; however this type of managed health care has been around since the early 1900s. In 1910, the State of Washington developed what is formerly known as the first Health Maintenance Organization (HMO). This organization was developed in order to provide services to mill owners in return for a monthly premium. After the launch of the first HMO, there were several programs developed outside of Tacoma, Washington. In the 1930s, there was an increase in managed care programs developed during the Great Depression and following World War II. In addition, by the 1970s there was a substantial rise until the 2000s, which the decline in HMOs began. (Fox and Kongstvedt, 2007) The current paper discusses the history of managed care as well as, the defining factors of managed health care plans, from the past till present.

During the early 1900s, managed care began to arise as an alternative to healthcare in working communities in the state of Washington. The purpose and goal of managed care was to help satisfy the healthcare needs of specific groups of workers and their families to include lumber, mining and railroad workers, in return for their fee and agreement. (Tufts Managed Care Institute, 1998) Managed care began to spread throughout the United States. For instance, in 1929, a medical doctor established a farmer’s health plan in exchange for money from individuals in order to build a new hospital. In addition, in Texas, Baylor Hospital developed a pre-paid medical plan for teachers, which were the beginnings of Blue Cross. From this program, several employers and hospitals developed pre-paid medical plans. By 1939, the idea reached California and the managed health care plan, Blue Shield, was developed, as well as Kaiser Health Foundation. (Fox and Kongstvedt, 2007)

By the end of World War II, there were several managed care plans in place. In fact, the emergence of several different sources for managed care plans were developed in addition to employer seeking health care for employees, such as housing lending companies. The purpose for housing lending companies developing managed care was to reduce the number of foreclosures. For instance, in 1937 the Home Owner’s Loan Corporation developed the Group Health Association in order to deter default on homes from families with high medical bills. (Fox and Kongstvedt, 2007)

Although there was an emergence of managed care plans, there were oppositions from the medical community, as well as the American Medical Society. Even with opposition, managed care plans still persisted through the 1960s, mostly in the western states of the United States; however, in 1973 the federal Health Maintenance Organization Act was passed. This act was important because it allowed for start-up funds for managed health cares for employers, as well as stated that all employers with 25 or more employees must offer a Health care plan. Therefore, managed care plans so a rise and peak between the years 1985 to 2000, as many doctors and hospitals collaborated together and started using managed care systems. In addition, during the 1980s, the preferred provider plan (PPO) was established in order to decrease the number of providers able to provide a discount to the patient under the plan and by the 1990s a decline in HMOs was observed as an increase in PPOs occurred. However, it should be noted that Medicare HMO increased substation ally during the 1990s at more than five million (Fox and Kongstvedt, 2007)

Managed care, as managed previously, is used in order to help increase the quality of care to the patient through cost management, provider management and quality assurance. The physicians that are within managed care plans are either members of the medical group of the managed care plan or employees of the health plan itself. The managed care plan contracts to either public or private sectors for purchase of the plan. The services are defined in a prepaid price, or capitation, at a per member, per month fee. The payments to the provider can be paid as a group or individual if the physician is receiving a salary. (Sekhri, 2000) From the traditional model of a managed care plan, Medicare HMO services were developed and increased substation ally during the 1990s in order to provide services for disabled individuals. Initially, the services were provided on a fee-for-service type of contract where the doctors were paid for each service in which they provided; however, the Medicare program developed into a managed care plan which paid for all or some of the services at a contracted rate. (NAMI, 2011)

As managed care developed throughout the years, it took on different structures and forms, such as Networks were independent health companies contracted services on a non-exclusive type basis. For example a network type of plan can be described as a group of physicians joining together to contract with a managed care plan. (Sekhri, 2000) Other types of managed care plans developed such as Risk-based Managed Care Entities (MCEs) and Administrative Services Organizations (ASOs). In addition, managed care plans developed provider based managed care plans such as Primary Care Case Management (PCCM), Enhanced PCCM, and Patient-Centered Medical Home (PCMH). (NAMI, 2011)

Risk-based Managed Care Entities (MCEs) were formed in order to manage benefits. For instance, if the contract was a full risk contract, the managed care plan would provide all benefits to the individual on a monthly basis. This is formally known as full capitation. However, if the individual surpassed the contract limits, the plan must pay out further costs and if the services were not used, the care plan would keep the unused funds in the plan. At a partial risk plan, the plan is prepaid in order to use a portion of services. For instance, a partial risk plan may pay for a specific service such as mental health care. Other services used by the individual would therefore be based on a fee-for-service. (NAMI, 2011)

Administrative Service Organizations (ASOs), on the other hand, are managed care plans that have little or no risk at all for providing care. This type of plan uses a fixed administrative, as well as provides services to doctors and patients. In addition, this type of managed care plan provides data reporting, patient care coordination and patient care management services. (NAMI, 2011)

Provider-based type of managed care systems, such as the Primary Care Case Management (PCCM) is a type of managed care plan in which the plan reimburses services on a fixed fee-for service and pays only selected primary care physicians a monthly fee to in order to provide services and monitor patients as needed. The Enhanced PCCM is another form of the PCCM where an improvement is seen in the management and quality of care for individuals with serious or chronic illnesses or diseases, including mental health issues. The Patient-Centered Medical Home (PCMH) is another type of Provider-based managed care plan that uses different methods to help patients, such as increased hours, coordination and management of individual patient cases specially provided by a physician, as well as a team-based approach for serious illnesses or diseases. (NAMI, 2011)

Managed care plans rose up until the year 2000 because they were significantly lower than other health plans. Employers began only offering managed health care plans to their employees and with the increase in enrolled individuals in these plans; there was also an increase in problems, such as paperwork mistakes, claim form mistakes. These types of mistakes led to denial of services for individuals that needed specific services provided for health reasons, thereby leading to emotional stress on patients as well. In addition, these types of mistakes further led to accusations to managed care programs of deliberately denying services to patients. These accusations were damaging managed care reputation. (Fox and Kongstvedt, 2007)

In addition to the mistakes occurring from managed care plans, there was an increase in health costs, referred to as health cost inflation. Several factors were hypothesized to be factors for inflation, such as drug therapies, prescription costs, lawsuits, and administrative costs. Two recent factors are indicated as medical technology and genomics. High tech cardiac devices and DNA manipulated drugs have been reported at $10,000 per patient per treatment. In addition, the founding of specific genes carrying disease causing alleles has also contributed to the inflation. (Fox and Kongstvedt, 2007)

Although there was a rise in inflation of health care costs, there are currently two major factors which are keeping managed care systems in demand in the United States, the decreasing economy and U.S. competition with health companies from other countries. This has helped maintain the cost of health care policies at a level where employers will purchase policies from U.S. companies, thereby, keeping managed care plans at a higher level. (Fox and Kongstvedt, 2007)

Overall, the type of managed care system used is currently the traditional method of contracted prices for the provider for specific services and co-insurance and co-payments from the individual to the provider. In addition, it was described previously that managed care system were exhibiting some negative aspects; however, with the develop and innovation of technology, as well as laws and regulations supporting members of managed care, the progression of managed care plans and increase the quality care for patients has been identified. Further monitoring from state agencies, such as performance monitoring, patient outcomes, as well as monitoring of health care policies should occur at the federal and state level in order for managed care plans to not only decrease health cost inflation, but increase quality of care for individuals.

References

Fox, P.D. and Kongstvedt, P.R. (2007). Chapter 1: An Overview of Managed Care” in The

Essentials of Managed Health Care. 5^th edition, ed. P.R. Kongstvedt (Sodbury, MA: are. Jones and Bartlett Publishers)

NAMI. (2011). Managed Care, Medicaid and Mental Health. Resource Guide Section 1.

Retrieved on August 26, 2013 from: http://www.nami.org/Template.cfm?Section=About_the_Issue&Template=/ContentManagement/ContentDisplay.cfm&ContentID=119135

Sekhri, N.K. (2000). Managed care: the US experience. World Health Organization. Bulletin of the World Health Orgaization. 78(6): 830-844.

Tufts Managed Care Institute. 1998. A Brief History of Managed Care. Retrieved on August 20, 2013 from: http://www.thci.org/downloads/briefhist.pdf