Managed Care
MJ Rainwater, RMA
April 28, 2014
Abstract
Health care is rapidly changing in the United States. Not only are providers being reimbursed differently; patients are being treated differently. This is due the failed health care delivery system known as Fee for Service. Fee for Service reimbursement is based on the assumption that health care is provided in a set of identifiable and individual units of services. Many are hopefully that the health care delivery system of managed care will be the answers to our failed system. Managed care is detailed and can be complicated, however the “work smart, not hard” phrase I am sure we have all heard, applies to the new delivery system. Many health care providers are not ready for this huge transition and some are trying to avoid it, however some providers have decided to take charge and have been preparing for a long time.

Managed care is a system that is based off of quality and cost effectiveness of health care delivery. Many different elements are required to achieve this goal. The most essential element of managed care is the primary care provider, also known as the PCP or gatekeeper of the patient’s health care. The PCP was given the nick name ‘The Gatekeeper’ because many managed care plans require members to obtain approval before receiving certain services. This was put in place by insurance carriers in order to prevent members from obtaining unnecessary services. (Concepts: Health Determinants)

Another method insurance carriers use to insure their members are receiving quality health care is by offering financial incentives. These incentives are determined by HEDIS (Healthcare Effectiveness Data and Information Set) Scores. The Healthcare Effectiveness Data and Information Set is a widely used set of health care performance measures that is developed and maintained by the National Committee for Quality Assurance. Preventative examinations and screenings such as colorectal cancer screenings, eye exams, and mammograms are the most common preventative measures. Although preventative exams are the most common, other measures such as Pharmacotherapy Management of COPD, mental health hospitalization follow up care, and immunizations are also weighted measures. (NCQA)

The History of Managed Care
Managed Care was first documented in Tacoma in 1917. Physicians were prepaid in the lumber industry. Then in 1939, Blue Cross and Blue Shield established the first managed care plan; this was a participating prepaid physician plans. A more advanced managed care delivery established in 1973 when the HMO Act of 1973 signed into law by President Nixon, using federal funds and policy to promote HMOs. Only twelve years later National total HMO enrollment reaches over nineteen million Americans. (Concepts: Health Determinants)

Fee for Service VS Capitation
Fee for Service reimbursement is based on the assumption that health care is provided in a set of individually identifiable units of services. These services include, but are not limited to: physical examinations, lab testing, medical supplies, and medications. Basically, doctors could order tests, referrals to specialists, and hospital services without concern for the cost and hospitals were free to charge whatever they deemed appropriate. This practice of years of unconstrained spending helped push U.S. health costs from six percent of national income in 1965 to fourteen percent in 1994. Currently, seventeen cents of every dollar is put towards health care delivery. (Leiyu Shi, & Douglas Singh) But still, in 2012, 15.4 percent of Americans were uninsured, down from fifteen and a half percent in 2011. The number of uninsured US citizens, forty-eight million, was not statistically different from the estimate of forty-eight and a half million in 2011. (The Census Bureau) Capitation is a flat rate, regardless what services the provider renders, they are paid one price per enrollee. This price is negotiated by the