1. Chapter 3
Managed Health Care

2. 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.”

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

4. Timeline - Healthcare Reimbursement
© Cengage Learning 2013

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

6. 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

7. 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

8. 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.

9. 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

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

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

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

13. 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

14. 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.

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

16. 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.

17. 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.

18. 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.

19. 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.

20. 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

21. 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.

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

23. 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.

24. 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.

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

26. 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.

27. 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.

28. 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

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

30. 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.

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

32. 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.