Managed care in the United States

Managed care in the United States,F. Douglas Scutchfield,Joel Lee,Dana Patton

Managed care in the United States  
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Summary Medical care in the United States continues to consume an increasing amount of the Gross Domestic Product. To control the rising costs of health care many industries have turned to a controlled form of financing and delivery of health care - often referred to as managed care. Many types of managed care exist, including preferred provider organizations (PPO), exclusive provider organization (EPO), and health mainte- nance organizations (HMO). HMOs involve prepaid premiums, limited panels of providers and assumption of financial risk on the part of the providers. A variety of HMOs are currently operating in the United States. Managed care involves taking risks by those who administer it. Some methods of controlling patient and physician behaviour by taking risks are capita- tion, risk pools and withholds. With capitation the physician is paid a 'per member per month' fee regardless of whether the patient uses the service. Risk pools are concerned with who shares the risk; for example, the primary physician shares the financial risk with specialists. Withholds involve a fee-for-servic e with a portion withheld which may be returned to the provider if he/she is parsimonious. A concern expressed about HMOs is the possibility of restricted services. Moreover, hospital expenses make up a large portion of the total health care dollar. In 1995 the average length of stay for a Medicare patient was 6.1 days as opposed to 3.9 days for the non-Medicare patient. Indeed, HMOs were the leaders in the development of same-day surgery and out-patient treatment. Increasingly, in the United States, public and social insurance plans are turning to managed care as a method to control health care expenditure. Some government insurance plans, such as Medicare and Medicaid, also increasingly offer managed health options. The trend, for now, in the United States increases enrollment in managed care plans. Although this is occurring at a rapid pace, managed care will probably not be the final solution to provision of medical care in the United States. is, in turn, tax deductible for the company, and the employee. In spite of that, as premiums increased, companies began to look for ways to control their premium cost This became an even greater concern as companies began to self-insure, bypassing insurance companies as intermediarie s, in their relationship with medical providers. This meant that they frequently acquired expertise within their own company for medical underwriting and understanding health care insurance and health care delivery. To control costs or at least to make them more predictable, these industries have turned to a form of health financing and delivery generally called managed care. Managed care is defined by Iglehart as: 'A system that integrates the financing and delivery of appropriate medical care by means of the following features: contracts with selected physicians and hospitals that furnish a comprehensive set of health care services to enrolled members, usually for a predetermined monthly premium; utilization and quality controls that con- tracting providers agree to accept; financial incentives for patients to use the provider and facilities associated with the plan; and the assumption of some financial risk by doctors, thus fundamentally altering their role from serving as agent for the patient's welfare to balancing the patient's needs against the need for cost control.'2 A variety of methods for financing health care costs and delivery of medical care exist under this rubric. The simplest is managed fee-for-service. In these arrangements providers are paid in the traditional fee-for- service method, or retrospective cost reimbursement for hospitals. However, there are methods imposed to control use of health care services. These methods include second opinion surgery, in which the insurance plan requires an additional surgical consultation before a surgical procedure. Another method is prior authorization, in which the physician must obtain authority The cost of medical care in the United States has been and remains a major problem for the nation. Medical care consumes an increasing proportion of the total Gross Domestic Product, a proportion that has consistently increased annually. Approxi- mately 70.3 per cent of individuals in the United States have health insurance that is employer-based.1 The premium is paid primarily by the employer, with some participation in the premium expenses being borne by the employee. The premium
Published in 2010.
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