Transcript MANAGED CARE - Institute for Public Administration at the

Managed Care in Transition
Public’s Assessment of the Job Various
Industries are Doing Serving Their
Consumers, 2000 - % saying a “good job”
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Computer Software
Banks
Car manufacturers
Drug companies
Health insurance co’s
Managed care co’s
Tobacco co’s
78%
73%
67%
59%
39%
29%
28%
Why Managed Care?
• Continuing problems related to cost, quality and
variations, access.
• Perverse incentives that FFS establishes.
• The effects on utilization of self-referral, doctor
shopping, and open access to specialists.
• Overall need for efficiency, e.g. appropriate use of
inpatient and outpatient services. IBM model.
• The belief that optimal rather than maximal use of
limited resources is appropriate. David Eddy – “As a
society, sooner or later we will have to determine whether there are
some benefits that are too plain small to justify the cost”
Is Managed Care Working?
• Taken together, empirical studies have found
little difference in quality between managed
care and FFS care. “Deficiencies in quality
occur in both types of health plans.” Dudley (MD,
MBA) & Luft (PhD), NEJM, April 5, 2001, p. 1088.
• Increase in health care costs have slowed
dramatically. Will this trend continue?
“Sad Story of Cost Containment in
One Chart”
Health Affairs
Jan 2002
Managed Care Basics
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Physician network
Gatekeeper
Capitation, withholds, bonuses
Utilization review (e.g., second opinions, assignment of
L-O-S, profiling, satisfaction surveys)
• MCOs responsible for health of a defined population - all
those who pay “dues.” (e.g., vaccination rates, consumer
satisfaction surveys - CAHPS)
• Practice guidelines - clinical management systems
informing physicians and patients & directing their
actions.
www.mayoclinic.com
Atrial fibrillation is a common type of heart arrhythmia. In fact,
more than 2 million — mainly older — Americans have this
heart rhythm abnormality, which can cause heart palpitations,
shortness of breath and fatigue. In atrial fibrillation, the heart's
two upper chambers (atria) beat chaotically (fibrillate). They
also don't beat in coordination with the two lower chambers of
the heart (ventricles). The result is an irregular and often rapid
heart rate. The heart can still pump blood — but less efficiently.
Atrial fibrillation is often associated with changes in the heart
that occur with age or as a result of heart disease. It may occur
occasionally or be a chronic condition. Although atrial fibrillation
isn't life-threatening, it can be serious. Left untreated, it can
lead to complications, such as stroke and congestive heart
failure.
MC Cost Cutting? (&QI?) Tools
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Co-pays, deductibles
Gatekeepers
Preauthorization and
utilization review
Provider networks
Restricted formularies for
medicine
Capitation, withholds,
bonuses
Provider profiling
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Preventive health care &
wellness
Risk skimming & dumping???
Horizontal and vertical
integration – IDS
Practice guidelines Disease management*
Better use of IT (prescription
entry, guidelines, e-mail
consultation)
Eddy
*Multidisciplinary effort to minimize the burden of disease by educating
patients, encouraging them to take an active role in their care, and
establishing a long-term therapeutic plan.
Insurance Plan Type Enrollment
FFS /
Indemity
22%
11%
7%
0%
23%
21%
25%
26%
46%
48%
50%
HMO
1993
PPO
2001
POS
HMO Ownership
1981
1993
2000
For Profit
12%
52.2%
63.5%
Non-profit
88%
47.8%
36.5%
What is “Traditional Indemnity”
or FFS Insurance
• Patients choose a physician from among
all those in a community, receive care and
a bill, and then submit the bill to the
insurer.
• Insurers pay fees that are “usual and
customary” in each community, which
means that the local physicians set fees.
FFS Incentives
• Demand inducement. Incentive for physician to
provide unnecessary treatments for additional
reimbursements. (Marketing inducement?
Worried patient inducement?)
• Duplicate tests, unnecessary procedures, are
examples of wasted resources that result from a
FFS system.
Earliest forms of Managed Care:
Group- or Staff-Model HMOs
Care provided through salaried physicians for a defined
population of patients. Or, MCO contracts with
physician groups who accept capitated payments.
Providers primarily treat own plan’s HMO patients.
e.g., Kaiser-Permanente.
Traditional Group Model HMO
Employer
Insurer
&
Provider
(assume
risk)
Patient
Individual Practice Association
IPA
• Care through a panel of contracted providers
for the provision of services to a defined
population of patients. Insurers can exclude
physicians who did not accept their rules and
fee schedules (discounted FFS or capitation).
• Physicians practice out of their individual
offices - a “virtual structure”
• IPA physicians have patients who are not HMO
members.
IPA Model HMO
Aggregated or Disaggregated Risk?
Employer
HMO
Shareholder
Discounted FFS payment
Network of Physicians
Physician A
Physician B
Shareholder
Hospital M
IPA Model HMO
Aggregated or Disaggregated Risk?
Employer
HMO
Shareholder
Capitated payment
Network of Physicians
Physician A
Physician B
Shareholder
Hospital M
IPA Model HMO
Aggregated or Disaggregated Risk?
Employer
HMO
Network of Physicians
Shareholder
Shareholder
Capitated payments
Physician A
Physician B
Hospital M
Preferred Provider Organization
PPO
Contractual arrangement between
providers and purchasers for the care
of paid enrollees. Gatekeeper often not
required; limited utilization review.
Point-of-Service (POS) Plan
Member chooses provider at point of service
(illness) rather than upon enrollment into
plan; higher co-pay or deductible when going
outside the network. POS plans more likely
than PPO plans to use risk sharing
arrangements (e.g., capitation).
New “Multi-tiered” Plans
give the patient three options
1. Coverage in a strictly managed HMO
with a limited number of providers – low
co-pays
2. Access to a PPO with slightly higher copays
3. Use of of out-of-network
providers/hospitals, with the highest copays and deductibles.
Note: Patients “pay” for greater choice of
providers & hospitals.
Managed Care Plan’s Problem
• Must satisfy customers
– Consumers
– Payers
• Must organize, coordinate and negotiate with
providers
• Often must maximize share holder value
Backlash Against Managed Care
• Plans seemed to do too much managing and not
enough caring.
• Consumers, providers, hospitals, government
agencies… started pushing back.
• As health plans eased off the cost-control
brakes, doctors and patients started using more
services.
• The result: double-digit premiums.
“Giving doctors the final word.”
U.S News & World Report, November 1999
UnitedHeatlh Group had just dropped a
bombshell…the company would no longer
second-guess a doctor’s decision. The dramatic
policy shift was hailed by consumer groups as a
first step toward HMOs putting patients before
the bottom line. Prior approval for treatment,
until last week , had been a rock-hard principle
that allowed HMOs to halt double-digit yearly
increases in the cost of health care.