March 23 2015 BHS450 Case MOD3 Roach C

Case Assignment- MANAGED HEALTH CARE
Catonia Roach
Trident University

BHS450- Health Care Delivery Systems
Dr. Joy Lough
March 23, 2015

Assignment Overview
A few years ago, some opined that managed care was either dead or nearly dead. Years later, managed care seems stronger than ever, or is it? After reading the background information, conduct additional research and respond to the below questions.
Case Assignment
1. What is managed care and where did it come from?
2. Discuss the current state of managed care in the U.S. health care system.
3. Briefly explain some of the potential impact of health care reform initiatives on managed care in the U.S.
Be sure to properly cite all references.

Introduction In the United States, the term managed health care or managed care is applied to express an array of different concepts and techniques aimed at decreasing the cost of providing health services, as well as improving the service quality. Various health organizations and service providers use these techniques. Sometimes they even offer the techniques to other organizations, which are often called Managed Care Organization (MCO). The United States National Library of Medicine defined managed health care program as an initiative or program of reducing unnecessary costs in the health care system by using assortment of mechanisms, which include economic inducements and motivations for the patients and physicians to choose less expensive forms of health care, different programs and techniques for reviewing and improving the medical requirements in specific services, sharing amplified beneficiary rates, controls and monitoring the admissions of the patients and lengths of their staying in the hospitals, the issues of cost sharing as well as reasons for outpatient surgery. The health care programs and strategies may be provided in different settings within different systems, like Preferred Provider Organizations and Health Maintenance Organizations. The very first attempt of the managed care system was initiated with the Health Maintenance Organization Act of 1973 which introduced the growth of Health Maintenance Organization (HMO). However, it was not until the late 1980s when the managed care system became popular and started to be credited widely. The organizations used managed care introduced several cost effective steps, like reducing needless hospitalizations and forcing the organizations that provide health care services to increase discount. This made the health care industry more competitive and efficient. The managed care concepts, plans and strategies became very popular in United States. However, there were several contradictory issues. As most of the managed care health service providers were profit based companies, they were accused with the perception that these companies were more concerned and keen in saving money rather than offering quality health care. There have been many critics of the issue, including consumer advocacy groups and dissatisfied patients, who pointed out that managed health care strategies were putting restrictions on medical costs by avoiding medically essential services for the patients. The seriousness of the allegations led to pass laws, mandating standard for managed care plans. The rate of health care spending started to increase around late 1990s.
Managed Health Care System in America In the United States, the introduction and development of managed care was encouraged with the Health Maintenance Organization Act of 1973. Previously, most of the techniques and concepts of managed health care were owned by different health maintenance organizations. However, in recent years, they have been used and operated by various private health benefit programs. Currently, the managed care is almost an omnipresent issue in America.
However, there have been many controversies and arguments regarding managed care among civilians, critics and proponents. The main issue is the system has not been successful enough to reduce or control medical costs as it promised in its core concepts. In current health care system, the managed care plans are mostly offered by health care providers that maintain integrated network system to offer efficient services to enrollees, selecting cost effective service providers and reduce cost by consulting affordable fees (Managed Care: Integrating the Delivery and Financing of Health Care - Part A, 1995). Sometimes, financial initiatives are used to encourage the enrollees (Lynch, 1992). Services under these providers cost much less for the patients and according to the America’s Health Insurance Plans, out of network service provider charges extremely high fees from the patients (Kolata, 2009). Managed care service includes disease management, wellness incentives, utilization management and review, patient education and case management. All of these services are available to both network based and without network benefit programs. The managed care organizations (MCOs) include Group practice without walls, physician practice Management Company, management services organization and independent practice association. The network based managed care programs are the Health Maintenance Organization (HMO), Independent Practice Association (IPA), Preferred Provider Organization (PPO) and Point of Service (POS). Among them, the HMO is responsible for combining both health care services and financing in for the patients. This is a state level organization. The physicians under the IPA are entitled to provide services for the members of HMO and a member of IPA can have multiple contracts with more than one HMOs. URAC or Utilization Review Accreditation Commission is an organization that promotes health care quality. This nonprofit organization accredits different health care associations. In the late 1980s, this organization was established with an intention to promote continuous improvement in the efficiency and quality of the health care management system through education and accreditation. This organization has significant contribution in managed care and in the health community. In spite of the attempts of the managed care to control health care cost, the health care spending in the United States is growing fast, surpassing the overall income of the country and rising at the rate of 24 percent quicker than the yearly GDP since 1970. On the other hand, the America’s Health Insurance Plans stated that about ninety percent of citizens with health insurance in America are registered within the boundary managed health care.
Impacts
Although the managed care was introduced to reduce health care cost, it later created a lot of controversies. The overall impact is still doubtful. According to the supporters of managed care, the system has improved over all standards as well as increasing efficiency which led to a better connection between quality and cost. They also say that there is no straight connection concerning the cost of care or service with its quality. In support, they present a study, conducted by Juran Institute in 2002, which found out that the cost of poor quality is caused by overuse and misuse, and there is a waste of thirty percent in all direct health care expenditures (Kaiser Public Opinion Spotlight: The Public, Managed Care, and Consumer Protections, 2004). On the other hand, the critics argue that the organizations which are responsible for providing managed care services are for-profit organizations and so far, they have not been able to establish successful health care policy. Instead, the organizations have been contributed more in higher health care expenditures. The quantity of uninsured citizens has been increased and these organizations have driven many health care providers. Furthermore, they have always put pressure on the health care quality. Capitation, the known financial arrangement of managed care puts the sources in the position of micro health insurers, considering the accountabilities for managing the cost of unknown cost of their clients. Small insurers normally have annual costs that vary way more than large scale insurance companies. A term, Professional Caregiver Insurance Risk is often used to refer the lack of efficiency in financing health care programs, which may occur when risks of insurance are moved to health care service providing organizations. These service providers are assumed to cover the fees in exchange for capitation payment. According to Cox (2006), they are not suppose to compensated adequately for the insurance risks they take without coercing managed care organizations to be uncompetitive in terms of price. The smaller insurers have lower chances of making a modest profit than big insurance companies and have higher chances for making big loss than big companies (Cox, 2010). All of these results suggest against the practicality of the insurance risk conjecture by the health care service providers.

Reference
Cox, T. (2006). Professional caregiver insurance risk: A brief primer for nurse executives and decision makers. Nurse Leader, 4(2): 48-51
Cox, T. (2010). Legal and ethical implications of health care provider insurance risk assumption. JONAS Healthcare Law, Ethics and Regulation. 12(4):106-16
Kaiser Public Opinion Spotlight: The Public, Managed Care, and Consumer Protections (June 2004). Retrieved March 23, 2015, from: http://www.kff.org/spotlight/managed care /index.cfm
Kolata, G. (August 11, 2009). Survey Finds High Fees Common in Medical Care. The New York Times
Lynch, M. E. (1992). Ed. Health Insurance Terminology. Health Insurance Association of America
Managed Care: Integrating the Delivery and Financing of Health Care - Part A (1995). Health Insurance Association of America, p.9