The techniques used to improve the quality of health care while reducing the cost of providing health care to both the patients and health care practitioners are referred to as managed care.
There are several organizations that provide managed care differing only in their mode of business operations and mainly constitute a network of physicians only or physicians, hospitals and other providers. The Managed care networks ensure that the efficiency of the health care practitioners increases by offering them economic incentives.
Group practice without wall (GPWW) organization also referred to as clinic without wall is an independent legal and formal entity of health care practitioners that provides certain services such as staffing, managing and marketing among others to physicians that run their own facilities.
The second type of managed care organizations (MCO) is the independent practice association (IPA) which comprises an association of physicians or organizations that hire medical practitioners who run their own facilities to provide health care services on behalf of the MCO under a negotiated fee-for-service basis (Kongstverdt 3-10).
The third type of MCO is the management services organizations (MSO) which comprises a group of physicians or a joint venture of physicians and the hospital or a joint venture between investors and physicians. This organization helps physicians to improve their efficiency by helping them to manage and perform administrative functions of their health care facilities.
For instance they may purchase the health care facility such as buildings and equipments from the physicians and lease them back to them enabling the health care practitioners to provide medical services as the organization takes care of the non-medical activities.
In other circumstances MSO’s provide the management and administrative services under a considerable fee that is affordable to the physicians. The fourth type of the MCO is the physician practice management company (PPMC) which offers management and administrative services to medical health practitioners by the provision of capital which aids in the expansion of the health care facilities (Kongstverdt 56-60).
The fifth and most common MOC is the health maintenance organizations (HMO) which contract physicians that have a salary scheme or those that they pay using a fixed rate on every patients each month that is the per-patient-per-month (PPPM) policy in the event these organizations offer preventive services and access to full medical health care which is usually controlled to prevent misuse of resources and malpractice.
Managed care plans devised by these organizations are less comprehensive and cheaper because they have no deductible rates and negotiate for lower health insurance premium rates. The preferred provider organizations (PPO) provide the same services as the HMO’s but differ by the fact that PPO’s allow patients to consult other physicians that are not among the PPO’s panel but at a higher deductible rate.
The point of service (POS) organizations provides a wider scope of managed care because they offer a combination of the services provided by HMO’s and PPO’s. The last type of MCO is the fee for service plan (FFS) which contracts physicians but pays them on the number of patients they tend to.
These organizations rely on technological advancement to market and differentiate themselves from other MOH’s thus increase the cost of health care which is transferred to insurance companies. On the other hand the insurance companies pass this cost to medical health care seekers but in the event ensure they attain comprehensive hospital care (Kongstverdt 66-92).
Techniques Used by MOH to Control Costs
These organizations review the utilization of health care services either before, during or after the implementation of health care services to avoid the provision of unnecessary services which increase the overall cost of health care. In the process the organization are able to formulate cost effective health care delivery systems.
MOH also implement the primary health care programs (PHC) to enable effective management of health care through provision of preventive measures, regular physical check ups and referral services to specialists. In the process the cost of health care is reduced as it is efficiently controlled. Moreover, they ensure patients visit physicians in their panels as they offer affordable health care costs.
They also ensure patients with complex health problems receive cost effective health care by using case mangers to monitor such incidents while liaising with specialists and rehabilitation centers among others. Furthermore, MOH use primary care case management strategies to form a direct contractual relationship between the state and Medicaid recipients which ensure the physicians are compensated for their services (Kongstverdt 237-285).
MCO compensate physicians by the use of fixed salary schemes which contain bonus benefits that are offered at the end of every year. MCO also use capitation payment schemes where they pay a fixed rate to physicians in accordance to the number of patients they tend to in a month that is per member per month.
The other method used by MCO’s to pay physicians is the use of discounted fees where the MCO negotiates for a discount with the physician for costs of their services (Kongstverdt 328-360).
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Kongstverdt, R. Peter. The Managed Health Care Handbook. 4th Ed. NY: Aspen Publishers