Healthcare financing-Managed Care Plans

Healthcare financing-Managed Care Plans

Managed care plans are designed to help control the cost of healthcare. As a type of health insurance, managed care plans involve a contract-based relationship between health care providers and facilities. The two parties ensure that health care services are accessible and affordable. Managed care plans have attracted immense popularity due to their effectiveness in reducing the costs of healthcare. As a result, a significant percentage of insurance providers have included the managed care component for cost control purposes. Various managed care plans have metamorphized over the years and seek to create a balance between low-cost care and quality health services (Sekhri, 2000). This discussion will provide detailed information regarding managed care plans using selected plans. Managed care plans have revolutionized the health landscape by highlighting critical aspects related to quality and cost containment.

Health Maintenance Organizations (HMOs)

Health Maintenance Organizations (HMOs) are plans that involve patients’ selection of a primary provider within a network. This provider is usually responsible for making referrals to other specialists. The insurance company only reimburses or pays the in-network providers (Heaton & Tadi, 2021). Firstly, one of the main advantages is the affordability of the plan. The low cost of the HMO plans increases the restrictiveness by reducing the freedom of choice. Secondly, the patients and insurance companies can predict the cost of care for each month. It is possible to forecast the cost of care. In terms of controlling costs, these forecasts are beneficial, which leads to the third advantage. The deviations that exceed the historical costs can be investigated to ascertain validity. This aspect of control is critical to the success and efficiency of managed care plans. The ability to control costs using a fixed monthly rate increases the likelihood of cost savings. Enrollees who register voluntarily have recorded prepaid group practices (PGP) costs that are 10 to 40 percent lower than those incurred by conventional insurance clients (Tollman, Schopper, & Torres-cantero, 1990).

The issue of the actual amount of savings is still debatable. Finally, the ability to penalize physicians financially ensures that the providers observe the set amounts. In case of required excessive, preauthorization is necessary. This approach increases the transparency of HMOs. While one may highlight those capped costs indicate less utilization of the health services, it is important to note that it also curbs the misuse of these services. For instance, physicians only recommend the necessary tests, medications, admission days, and interventions (Tollman, Schopper, & Torres-cantero, 1990). This saves the consumption of resources unnecessarily which is likely to occur when using traditional insurance plans.

Disadvantages

Firstly, the low cost of the HMOs reduces the freedom of choice in terms of primary providers. This limited choice may affect access to more sophisticated treatments. Secondly, HMOs have poorly prioritized preventive care and focused more on the management of curative care costs. Preventive care is better at addressing population health than curative care. However, very limited efforts have been directed towards the expansion of preventive care. In addition, physicians lack incentives to promote preventive over curative care. However, prevention costs may be perceived as high in the short term without considering the benefits. The cost sensitivity of HMOs does not offer physicians and patients an allowance to explore preventive care because it may open loopholes for unnecessary treatments and medications and increase care costs, which contradicts the objective of managed care plans (Tollman, Schopper, & Torres-cantero, 1990).

Thirdly, the voluntary nature of enrollment in HMOs is limited, leading to discrimination. In the USA, HMOs are known for enrolling young and healthy individuals. Discrimination tactics against the chronically ill-aged population have been observed. These chronic conditions are viewed as a prohibitive cost. For instance, mental patients may not benefit from HMOs due to the need for numerous consultations and the difficulty of treatment. Since cost is an important aspect of HMOs, the plan does not cover the admission days for psychiatric conditions. The need for long-term treatment of various mental illnesses is unattractive for insurance companies (Tollman, Schopper, & Torres-cantero, 1990). This aspect increases the health gap between mentally ill individuals and other kinds of patients and demands that patients fund such treatments out of pocket.

Finally, the patients who enroll for HMOs have difficulties accessing emergency care that has not been referred. This means that if they seek emergency care from other providers, they must fund the cost out of their pockets. This increases the likelihood of negative outcomes in case of the need for emergency treatments and makes it difficult for healthcare providers to safeguard the health of patients in such situations. The reduced choices imply longer waiting periods for patients as the physicians are fewer and overwhelmed. This may undermine the importance or benefits of HMOs when patients are unable to secure appointments in emergency situations. It may also lead to deterioration of health if patients must secure a referral for specialized care (Tollman, Schopper, & Torres-cantero, 1990).

Preferred Provider Organizations (PPOs)

Preferred Provider Organizations (PPOs) are plans that offer clients or patients a network of hospitals, specialists, and physicians alongside other healthcare workers. Patients are allowed to use these healthcare providers for care. However, they can use healthcare workers who are out of the provided network to access covered services. This privilege or allowance comes at a higher cost. Using the preferred healthcare providers within the network saves the patient money.

Advantages

Firstly, patients using PPOs have their emergency and critical care costs covered. This means that patients can see providers who are nearest to them and not within the network for such services. The result is an increase in positive health outcomes as access to care is improved. However, it is necessary to consult the insurer to determine the necessity of services that are sought outside the provided network. Secondly, patients do not necessarily need a referral to see a healthcare provider outside the network. Once the patient has determined that the services are necessary and covered through the insurance company, they can go ahead and make an appointment (Hurley, Strunk, & White, 2004). This improves access to care, which is critical in ensuring that the patient population is healthy.

Thirdly, patients have increased choices, which expands their ability to make healthcare-related choices. If a patient can pay for services that are not covered by health insurance or are offered by out-of-network providers, they can always access them (Hurley, Strunk, & White, 2004). Finally, this freedom and flexibility can have a positive impact on preventive care expansion. If a doctor recommends the adoption of such care, the patient who will be required to co-pay with the insurance company is allowed to access such services. Thus, in comparison to HMOs, freedom and flexibility can positively impact the adoption of preventive care.

Disadvantages

Patients who use the PPOs tend to incur higher costs through monthly premiums. When patients seek services from providers who are not listed, they usually pay the full amount and file reimbursement claims. Families incur $1,694 monthly, while individuals can spend half of the amount (Hurley, Strunk, & White, 2004). This estimated cost is slightly above the amount that HMO plans cost patients. Secondly, individuals that register for PPOs must be alert and organized enough to manage their health affairs. Personal management of documents when filing for reimbursements is the patient’s responsibility. If an individual lacks such an organization, they are likely to spend more because insurance companies will not reimburse unjustified claims.

Thirdly, PPOs undermine the managed care plans’ base intention, which is cost controls. This disadvantage features in the allowance to seek care from out of network providers even without referrals. This means that patients can seek services without the cost limitation as long as they are deemed necessary. Finally, PPOs lack the ability to generate comparison indicators because patients are not enrolled, as is the case for HMOs. The health care players can barely assess the impact that PPOs have on access to care and cost containment (Hurley, Strunk, & White, 2004).

The performance of managed care plans in the United States

Managed care plans in the United States attract equal praise and backlash from different quarters. Despite all the feedback, the managed care plans have unearthed numerous aspects that are critical for the functionality of the healthcare system. According to doctors, the care plans have led to unfair labor practices. Physicians can be dismissed due to the recommendation of expensive services depending on the plan. The physicians feel that managed care plans intrude on their profession and the ethics that govern it. Regarding cost savings, the managed care plans overemphasize this aspect at the expense of quality care. The heightened concerns about the quality of care while using managed care plans may lack validity because few documented cases confirm the same. However, the loss of professional autonomy among physicians may be unsettling for most providers. Regardless of these complaints, managed care plans have changed the American health landscape (Sekhri, 2000). The plans have also opened an opportunity to gain experience about the most practical policies that can be used in the future.

References

Heaton, J., & Tadi, P. (2021, March). Managed Care Organization. StatPearls.

Hurley, R. E., Strunk, B. C., & White, J. S. (2004). The Puzzling Popularity Of The PPO. Health Affairs, 23(2), 56. doi:10.1377/hlthaff.23.2.56

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

Tollman, S., Schopper, D., & Torres-cantero, A. M. (1990). Health maintenance organizations in developing countries: What can we expect? Health Policy and Planning, 5(2), 149-160. doi:10.1093/heapol/5.2.149

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Healthcare financing-Managed Care Plans

Assignment Details
Healthcare financing in the United States is complex and involves numerous stakeholders. As U.S. healthcare costs started to rise in the 1970s, the health maintenance organization (HMOs) in the United States evolved with the Health Maintenance Organization Act of 1973. Thereafter, other managed care plans proliferated.