Title: Managed Care
1Managed Care
- James G. Anderson, Ph.D.
- Purdue University
2History of Managed Care
- Early Plans Kaiser-Permanente Group
Health of Puget Sound Health Insurance Plan, NY - HMO Act 1973 200 million awarded to
non-profit groups - Employers in the 1980s began to contract with
managed care plans to reduce health care costs
3History of Managed Care
- Federal and State Governments began to encourage
Medicare/Medicaid enrollees to enroll in managed
care plans - Managed Care Plans begin to withdraw from
covering Medicare enrollees
4Major Types of Plans Group or Staff Model
- Group of physicians contracts to provide services
- Physicians are employees and are not organized in
separate medical groups - Exercise control over the amount and type of
care patients receive - Primary care doctors act as gatekeepers
- Pre-approval of specialty services, expensive
diagnostic tests, hospitalization - Incentives to physicians to limit services
5Major Types of Plans Independent Practice
Association
- Physicians remain in their own offices but
contract to treat patients enrolled in plan - Health plan contracts with physicians to provide
care at a negotiated rate per capita, for a
negotiated fee, or on a fee-for-service basis - Physicians may contract with more than one
managed care plan - A portion of the physicians fees may be held
back until the end of the year and distributed if
there is a profit
6Major Types of Plans Preferred Provider
Organization
- Physicians remain in their own offices but
contract to treat patients enrolled in plan - Health plan contracts with physicians to provide
care according to a discounted fee schedule - Physicians may contract with more than one
managed care plan and can see other patients on
a fee-for service basis - Plans generally do not use primary care
physicians as gatekeepers
7Major Types of Plans Point-of-Service
- Encourages the coupling of a patient with a
primary care physician who acts as a gatekeeper
by offering employee incentives (e.g., more
benefits, lower co-payments) - Enrollees have the freedom to seek care from
nonaffiliated providers but pay substantially
more out-of-pocket for care
8Percentage of all Covered Workers By Type of
Plan1996-2002
9Number of Persons Enrolled in Medicare under
Different Payment Options 2002
10Number of Medicaid Beneficiaries Enrolled in
Managed Care1990-2002
11How do managed care plans influence physicians
practice behavior?
- Clinical rules - treatment protocols,
algorithms, practice guidelines, regulations,
administrative constraints, utilization review - Incentives - Reimbursement through per capita,
discounted fee schedules, bonuses, etc.
12Care vs. CostExamples of US Healthcare Incentives
- Hospital Stay. If the patients collectively
average fewer than 178 days in the hospital per
year, the doctor receives a bonus of 2,063 per
month. If the patients together spend more than
363 days, the doctor receives nothing extra.
13Care vs. CostExamples of US Healthcare Incentives
- Emergency-room Use. If emergency-room costs
average les than .84 per patient in any given
month, the doctor receives a 453 bonus for that
month. If the patients average more than 1.64,
their doctor receives nothing extra.
14Care vs. CostExamples of US Healthcare Incentives
- Specialist Referral. If specialist costs per
patient average less than 14.49 per month, the
doctor gets a bonus of 1,323 for the month. But
if the costs rise above 30.49, the doctor
receives nothing extra.
15Typical Hospital Stay for New Mothers
- Australia 4-6 days
- Canada 2 ½ days
- France Up to 2 weeks 5-day minimum
- Germany 7 days
- Great Britain 3 days
- Ireland 5-6 days
- Japan 5-7 days
- Netherlands Mostly home births with all-day
nurse for a week - Sweden 1-3 days w/ midwife home visit
- United States 24-36 hours
16Percentage of Mastectomies Done on an Outpatient
Basis
17Do managed care plans reduce health care costs?
- Plans have a significant impact on use and costs
of service, although this may not result in lower
system-wide costs - A survey of 2,409 employers found that
respondents spent 14.7 less per employee for
HMO coverage than the average cost per employee
of traditional indemnity plans - The average cost per employee for care delivered
through PPOs was 6.1 below that of indemnity
plans - The average cost per employee of point-of-service
plans was 7.9 lower than traditional indemnity
plans
18How do managed care plans affect quality of care?
- Studies have shown that elderly, poor and
chronically ill patients have worse physical
outcomes under Managed care - Hospitals under managed care plans more
frequently deny admission or prematurely
discharge mentally ill patients - HMOs frequently limit access to National Cancer
Centers and enrollment in clinical trials of
experimental cancer treatments
19Potential BenefitsPatients
- Less over-treatment
- More preventive care
- Lower cost
- Minimal paperwork
- Low or no co-payment and deductibles
20Potential BenefitsPhysicians
- Lower practice start-up costs
- Dependable income
- Regular hours
- Structured practice
- Incentives for cost-effective care
- Assured patients
21Potential BenefitsPayers
- Lower health care costs
- More predictable costs
- Use of business management practices (e.g., CQI)
22Potential BurdensPatients
- Incomprehensible benefit plans
- Limits on specialty services, hospitalization,
etc. - Physician is no longer the patients advocate
23Potential BurdensPhysicians
- Physicians role is changed to that of a
business-person - The physician is less responsive to the patients
needs - Physicians lose clinical autonomy in ordering
tests, treatment, hospitalization, etc.
24Potential BurdensPayers
- Complex health care plans
- Inadequate data concerning outcomes, quality of
care - Concerns about price-fixing, monopolization
- Uncertainty concerning liability
25Percent of Public Dissatisfied with Health Care
26The Backlash Against Managed Care
- AMAs patient Protection Act.
- Patients Rights bills in the U.S. Congress.
- Over 27 states have passed patient protection
laws that include some or all of the following - Right to sue External appeals Referra
l out-of-network Coverage of Emergency
services Access to prescriptions not
covered by the plan
27Conflicts
28Employer Backlash
- Minneapolis businesses launched a program to
overhaul local health delivery systems. Their
objective was to bypass the region's three large
health maintenance organizations (HMOs), contract
directly with doctors and inject a dose of
free-market economics into medicine. - No fewer than 26 of the region's largest
corporations -- including 3M, Honeywell, Dayton
Hudson, Pillsbury and Carlson Companies --
entered into the arrangement, which has been
described as a rebellion.
29Employer Backlash
- In the new scheme, doctors are free to charge,
organize and operate as they choose. - But employees get booklets which rank doctor
groups on what they charge and how they fare in
terms of customer satisfaction -- and employees
who choose expensive doctors must pay the extra
out-of-pocket. - Payments to doctor groups are raised if they wind
up attracting sicker-than-average patients -- who
cost more to treat. - Physician groups which find ways to treat
patients more efficiently get to keep the savings
-- while inefficient or wasteful doctors who go
over budget are penalized.
30Physician-Patient Conflicts
- A number of studies and press reports indicate
that the financial arrangements Health
Maintenance Organizations (HMOs) make with
doctors reward physicians and hospitals for
deferring or withholding care that is deemed too
expensive, pitting the financial interest of the
doctor against the medical needs of the patient.
For example
31Physician-Patient Conflicts
- The brain tumor of a 5-year old Florida girl was
repeatedly misdiagnosed as the flu until her
mother took her to a facility outside the HMO -
which refused to pay for the surgery resulting
from the correct diagnosis. - Long Island Jewish Hospital in Queens replaced
private doctors in its anesthesia department with
lower-paid and less-experienced salaried
physicians, and in one 10-week period four
patients died from anesthesia-related
complications after successful surgery. - A California HMO was fined 500,000 by the state
for refusing to refer a young girl to a
specialist for her Wilm's tumor and instead
assigning a physician who had never operated on
children or on a Wilm's tumor.
32Public Misunderstanding of HMOs
- Some 55 percent said they have either never heard
the term "managed care" or didn't have a good
understanding of what it means. - Nearly one-third said they have never heard the
term "health maintenance organization" -- or had
heard it but didn't know its meaning. - Only 52 percent knew that HMOs put emphasis on
preventive care. - One in three who knew what HMOs were didn't know
that they provide coverage for set monthly fees. - Moreover, one in four in an HMO didn't know that
their choice of physicians was limited.
33Patients Bill of RightsEnrollment
- Prohibit managed care plans from refusing to
enroll patients with preconditions.
34Patients Bill of RightsPatient Information
- Publish managed care plans performance ratings.
- Establish and inform members of grievance
procedures. - Ban physician gag clauses in contracts.
35Patients Bill of RightsMandated Services
- Require coverage for a 48 hour hospital stay
after delivery and mastectomies. - A Hospital patient who is too sick to be
discharged may request their case be reviewed by
an impartial arbiter. - Require coverage for emergency room visits when
there is a reasonable expectation that an
emergency exists. - Guarantee patients right to be referred to a
specialist when they require specialty care..
36Patients Bill of RightsMandated Services
- Permit members to seek care from providers
outside the plan when more experienced providers
exist for the illness. - Cover prescription drugs not on the plans
approval list if the patient can show a need for
the drug. - Permit members to enroll in clinical trials for
new drugs and therapies.
37Patients Bill of RightsIncentives
- Prohibit managed care plans from paying bonuses
to doctors who delay or withhold treatment for
patients. - Prohibit capitation payments to family physicians
and internists. - If a health plan cancels or refuse to sign a
contract with a doctor, require the plan to
explain its reasons. Permit the doctor to appeal
and request a hearing. a
38Patients Bill of RightsGrievances
- Establish independent boards to review decisions
to deny coverage for specific procedures. - Require plans to respond within three hours to a
doctors request to extend a patients hospital
stay. - Plans must rule on patient request for services
within 14 days or 72 hours in urgent cases. They
must respond to an appeal within 30 days or 72
hours in urgent cases. - Allow patients to sue their managed care plan
when medical benefits are improperly denied.
39The Changing Face of Managed Care
- Broader and more inclusive provider networks
- Elimination or modification of Gatekeepers
- Reintroduction of prior authorization
requirements for selected services - Expanded investment in disease and case
management - Increased consumer cost-sharing and introduction
of consumer-directed plans - Capitated payment arrangement with providers
scaled back or eliminated
40Questions
- How much control over access to specialized care
and clinical decisions should the managers of
managed care be able to exercise? - How much autonomy should physicians have
in Setting fees? Ordering diagnostic
procedures? Referral of patients to
specialists? Ordering hospitalization?
Enrolling patients in experimental
therapies?
41Questions
- What is the quality of care delivered by NPs and
PAs compared to care delivered by MDs? - Does the substitution of lesser trained personnel
for RNs adversely affect the quality of care?
42Heart Attack Death Rate Higher In HMOs
- Health Maintenance Organization (HMO) enrollees
with cardiac disease are twice as likely to die
after a heart attack as those with traditional
fee-for-service coverage, says cardiologist Paul
Casale in a report to the American Heart
Association.
43Heart Attack Death Rate Higher In HMOs
- Casale studied 4,000 heart attack patients
admitted to Pennsylvania hospitals in 1993. - He found HMO patients are less likely to receive
two surgical procedures common after heart
attacks -- heart catheterization and angioplasty.
- However, Casale's study did not have data on how
long patients waited to get care -- considered
the best predictor of heart attack survival
rates. - But Casale notes that HMO policies discouraging
emergency room use could have delayed patients
seeking treatment.