Managed Care Plans
Posted on December 14, 2008 - Filed Under Finance
Managed care plans strive to combine the provision of healthcare services and the insurance function into a single entity. Traditionally, such plans have been created by insurers who either directly own a provider network or create one through contractual arrangements with independent providers. Recently, however, providers in some areas have banded together to form integrated delivery systems (IDSs) that are capable of offering both insurance and healthcare services.
One type of managed care plan is the health maintenance organization (HMO). HMOs are based on the premise that the traditional insurer/provider relationship creates perverse incentives that reward providers for treating patients’ illnesses while offering little incentive for providing prevention and rehabilitation services. By combining the financing and delivery of comprehensive healthcare services into a single system, HMOs theoretically have as strong an incentive to prevent as to treat illnesses.
Because of the many types of organizational structures, ownership, and financial incentives provided, HMOs vary widely in cost and quality. HMOs use a variety of methods to control costs. These include limiting patients to particular providers by using gatekeeper physicians who must authorize any specialized or referral services, using utilization review to ensure that services rendered are appropriate and needed, using discounted rate schedules for providers, and using payment methods that transfer some risk to providers.
In general, services are not covered if beneficiaries bypass their gatekeeper physician or use providers that are not part of the HMO.
The federal Health Maintenance Act of 1973 encouraged the development of HMOs and created a great deal of interest in the concept by providing federal funds for HMO-operating grants and loans. In addition, the Act required larger employers that offer healthcare benefits to their employees to include a federally qualified HMO as a healthcare alternative, if one was available, in addition to traditional insurance plans.
Taken From : HEALTHCARE FINANCE
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