Chapter 3 Managed Health Care

Managed Health Care Managed care provides reasonably priced health care for consumers and providers who agree to certain conditions. It is currently being tested by growing “consumer-directed health plans.”

Managed Health Care Managed care developed –Affordable health care –Comprehensive health care –Prepaid health care

Timeline - Healthcare Reimbursement © Cengage Learning 2013

Significant Managed Care Federal Legislation 1973 – HMO Act 1974 – ERISA 1981 – OBRA 1982 – TEFRA 1985 – Preferred Provider Health Care Act 1985 – COBRA

Significant Managed Care Federal Legislation (cont.) 1988 – Amendment to the HMO Act of 1973 1989 – HEDIS 1994 – HCFA’s Office of Managed Care 1996 – HIPAA 1997 – MSAs created 1997 – Balanced Budget Act 1997 – State Managed Care Legislation 2003 – Medicare Modernization Act

Managed Care Organizations Responsible for group of enrollees Health plan, hospital, physician group, or health system Capitation payment system If services rendered cost less: MD profits If services cost more: MD loses money

Primary Care Providers (PCPs) Participating providers are liable for supervising, organizing healthcare services, and approving referrals for specialists and inpatient hospital stays. PCP serves as a gatekeeper.

Quality Assurance Activities that assess the quality of care in a healthcare setting Types Government oversight Patient satisfaction surveys Data from grievance procedures Reviews by independent organizations NCQA and The Joint Commission

Quality Assurance QISMC HEDIS Ensures accountability of plans through objective, measurable standards. HEDIS Performance measures used to evaluate managed care plans (report cards).

Utilization Management (Utilization Review) System of controlling healthcare costs and quality of care by evaluating care provided

Utilization Management (Utilization Review) (cont.) Preadmission certification Review of necessary medical outpatient treatment Preauthorization Prior approval for reimbursements

Utilization Management (Utilization Review) (cont.) Concurrent review Review of necessary medical inpatient treatment Discharge planning Arrangement of appropriate healthcare services for patient prior to discharge

Utilization Management (Utilization Review) (cont.) URO – URO is used by some managed care plans for establishing a utilization management program. TPA – Third-party administrator provides health benefits claims administration and other outsourced services for self-insured companies.

Case Management Develops cost-effective patient care plans for difficult cases.

Second Surgical Opinions (SSO) A second doctor is asked to assess the need for surgery. **Remember If mandatory by carrier Place 32 modifier on E/M code. E/M service should be a new patient visit, not a consultation.

Gag Clause Prevents providers from discussing all treatment options with a patient whether or not plan will provide reimbursement. Is prohibited from managed care contracts. Ensures that all medical advice is given whether or not treatment is covered.

Physician Incentives Incentives are provided to physicians to encourage them to reduce or limit services. Medicare requires plans that contract with Medicare or Medicaid to disclose all physician incentive plans before a contract will be renewed.

Managed Care Models EPO – Exclusive provider organization This is the most restrictive of the models. Member must receive all care within the network. Care received outside the network results in the full cost being paid by the member.

Managed Care Models (cont.) IDS – Integrated delivery system Organization of affiliated providers’ sites (e.g., hospitals, ambulatory surgical centers, or physician groups) that offer joint healthcare services to subscribers Models: PHO, MSO, GPWW, IPO, medical foundation

Managed Care Models (cont.) HMO – Health maintenance organization Provides comprehensive healthcare services to voluntarily enrolled members on a prepaid basis. Provides preventive care services and health risk assessments. Ensures members have PCP. Uses copayments.

HMO Models Group model Staff model Direct contract model Individual practice association Network model Closed Panel Open Panel

Managed Care Models POS – Point of service Offers freedom to use managed care panel or self-refer. In-network services incur standard out-of-pocket costs (copayment). Out-of-network services require payment of deductible and/or coinsurance.

Managed Care Models (cont.) PPO – Preferred provider organization Network of physicians and hospitals joined together in contract with insurance companies, employers, or other organizations to provide health care to members at a discounted rate. Use of non-PPO providers results in higher out-of-pocket costs. Premiums, deductibles, and copayments are higher than HMO.

Managed Care Models (cont.) TOP – Triple option plan Choice of HMO, PPO, and traditional health insurance plan Cafeteria plan

Consumer-Directed Health Plans Provide individuals with an incentive to control the costs of health benefits and health care. Offers full coverage for in-network preventive care.

Consumer-Directed Health Plans (cont.) Plans offer the freedom to spend up to a designated amount. Members assume responsibility for higher cost sharing after designated amount is expended.

Consumer-Directed Health Plans (cont.) Three tiers Tax-exempt account used to pay for healthcare expenses – provides more flexibility Out-of-pocket payments after tax-exempt amount reached and before deductible (gap in coverage) High-deductible insurance policy – reimburses allowable healthcare expenses after deductible met

Consumer-Directed Health Plans (cont.) Types Customized subcapitation Flexible spending account Health savings account; health savings security account Healthcare reimbursement account Health reimbursement account

Accreditation Voluntary process that a healthcare facility or organization (e.g., hospital or managed care plan) undergoes to demonstrate that it has met standards beyond those required by law. NCQA reviews plans.

Impact of Managed Care on Physician’s Office Separate bookkeeping systems Tracking system for preauthorizations Preauthorizations/precertifications Referrals Special administrative procedures Copayments

Impact of Managed Care on Physician’s Office (cont.) Patient preauthorization interviews; explains out-of-network requirements if self-referring. Additional paperwork for specialists. Some MCOs employ case managers to follow-up with patients. Preauthorization documentation is attached to some claims.