UNDERSTANDING MANAGED CARE

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UNDERSTANDING MANAGED CARE
Managed Care Friend or Foe?

• Assoc Professor Goh Lee Gan
• Department of COFM, NUS

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OUTLINE

• Definition of managed care
• Evolution of managed care in the US
• Managed care in Singapore
• The way ahead
• Take home messages

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DEFINITION

• Managed care may be defined as a variety of
  methods of financing and organising the delivery
  of comprehensive health care in which an attempt
  is made to control costs by controlling the
  provision of services.
• JK Iglehart, NEJM 19943311167-71

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EVOLUTION IN US

• American scene today
• R Adams Dudley Harold S Luft. Managed Care in
  transition. NEJM 2001, 1590 ?
• Managed care experiences rapid growth not
  primarily due to enthusiasm for this approach on
  the part of patients or providers. Patients have
  mixed reactions to managed care view some
  practices as emphasing cost control over quality.

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EVOLUTION IN US

• American scene today
• Rene Favaloro. An Overview of Present Medical
  Practice and of Our Society. Circulation
  1999991525-1537 ?
• In the fast-growing HMO sector, nearly 70 of
  HMOs are investor owned, profit being the most
  important goal.

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EVOLUTION IN US

• The companies compete to report favourable
  results to shareholders with substantial margins
  (20 to 30 of the total revenue), claiming that
  those are the amounts that would be expected in
  any business.

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EVOLUTION IN US

• Managed care went through several phases
• R Adams Dudley Harold S Luft. Managed Care in
  transition. NEJM 2001, 1590 ?
• Group or staff model HMOs (1942)
  Kaiser-Permanente and Group Health Cooperative of
  Puget Sound. Socially motivated. Affordable care
  for the immigrants.

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EVOLUTION IN US

• HMOs and IPAs (1960s and 1970s) Policy makers
  and employers alike began to consider prepayment
  as an alternative to fee-for-service system of
  payment.
• PPOs (1980s) California passed legislation to
  permit contracts with selected providers.
  Networks of PPOs were formed.

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EVOLUTION IN US

• PPOs and POS (1990s) The response to employees
  wanting less restricted service. Copayments for
  services of doctors outside the network.
• Multi-tiered plans presently Employees can
  choose between (a) HMO scheme, (b) PPO scheme
  with some copayment, or (C) PPOs with POS scheme
  with even more copayment. Different coverage for
  employees of different salaries in the same
  company

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EVOLUTION IN US
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MANAGED CARE IN SINGAPORE

• Existed longer than we thought
• Corporate fee-for-service system
• Agent system
• HMO
• Fee caps

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MANAGED CARE IN SINGAPORE

• Corporate fee-for-service system
• Company assumes risks or under-written by
  insurance company
• Negotiates with health care provider for fixed
  consultation fee may be very low
• For hospital care, company buys a hospitalisation
  surgical insurance (HS)

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MANAGED CARE IN SINGAPORE

• Corporate fee-for-service system
• Health care provider recovers money from the
  inflated drug fees
• Cost control is a problem to the employer he is
  not very bothered about quality
• doctors alleged to be profiteering on drugs high
  volume low quality
• The low consultation fee erodes the image of the
  GP

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MANAGED CARE IN SINGAPORE

• Agent system
• Gives the employer some cost control for
  outpatient care
• MCO is the agent -- may be the administrative arm
  of association of independent providers
• MCO collects capitation fee but pays its assigned
  doctors, fee-for-service

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MANAGED CARE IN SINGAPORE

• Agent system
• At least 3 such MCOs in Singapore
• Balestier Medical Group
• AIA-HMO Medical Group
• Managed Health Care Group (MHC)

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MANAGED CARE IN SINGAPORE

• HMO
• A prepaid capitation fee is collected from
  employer or individual by MCO
• MCO pays capitation fee to provider
• Services provided to enrollees are defined
• Only 1 true HMO in Singapore NTUC MHS has
  corporate and individual schemes is a
  not-for-profit HMO

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MANAGED CARE IN SINGAPORE

• HMO
• Focus group meetings with providers in 1999 now
  has
• additional payments for expensive medicines as
  one-off
• Additional capitation plus reimbersement for
  medications for chronic medications
• Top up 50 for deficits per head below 27
  per visit

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MANAGED CARE IN SINGAPORE

• HMO
• Experience so far
• Fewer phone calls from patients and providers now
  but
• Some patients unhappy with exclusions e.g.
  essentiale forte for liver disease
• Some providers unhappy with patients who visit
  frequently, or who want additional medications

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MANAGED CARE IN SINGAPORE

• HMO
• Some providers unhappy with some exclusions
• MCO unhappy with some providers
• Excessive use of augmentin for URTI
• Triple the quantity in use of Daflon per patient
• Routine use of more expensive medicines

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MANAGED CARE IN SINGAPORE

• HMO
• Real savings of
• Medical expenditure from
• Narrowing of variation of services from a given
  condition with similar severity
• Standardisation of fees for a given procedure
  and
• Open book system where treatment and
  hospitalisations can be scrutinised by all

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MANAGED CARE IN SINGAPORE

• HMO
• Real savings from
• Increase in productivity
• HR saves time from preparing their annual health
  budget and collation of utilisation expenses

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MANAGED CARE IN SINGAPORE

• HMO
• Potential savings from
• Lower health services usage by employees
• Better continuity of care with a regular
  physician (this advantage may be lost with desire
  for access to more providers)
• Focus on prevention may result in fewer visits

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MANAGED CARE IN SINGAPORE

• Fee caps system
• Fee caps e.g. 18 for usual CM and 25 where
  more medicines are needed 35 for chronic
  conditions
• Acceptable to health provider because some cost
  adjustment possible since it is still
  fee-for-service attendance is not discouraged
• Probably the most acceptable model

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THE WAY AHEAD

• We need to go beyond feeling unhappy and helpless
  to survive managed care
• Perhaps we can promote the fee caps system of
  cost control but we need to work at it
• We will have to keep an eye on for-profit HMOs
• The providers and the medical profession can do
  positive things

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THE WAY AHEAD

• Providers can
• Exercise voluntary cost control (within limits)
  this will dampen the desire for external control
• Level up. Quality care within budget will win
  public trust and increase willingness to pay for
  what is needed doctors will eventually feel less
  dissatisfied professionally

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THE WAY AHEAD

• The profession can
• Prevent major unscrupulous for-profit MCOs
  surfacing in Singapore it may come in the shape
  of hungry young doctors unless the profession
  provides the necessary leadership to a satisfying
  professional practice
• Maintain a surveillance system to watch behaviour
  of for-profit HMOs

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THE WAY AHEAD

• The profession can
• Provide leadership on what is good clinical
  practice, and reasonable consultation cost or
  premium
• Meet government to present the professions stand
  whenever the opportunity occurs

28
Cost of health care Average medical cost per
employee by industry for period 1991-1995
On average it would cost 450 per year per head
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TAKE HOME MESSAGES

• Managed care is not new the foe is in us
• Providers and the medical profession need to work
  on voluntary cost control to dampen desire for
  external control
• We need to ensure cost control is balanced with
  quality
• Providers and the medical profession must keep a
  look-out for unscrupulous for profit HMOs

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Thank you