The Science Journal of the American Association for Respiratory Care

1996 OPEN FORUM Abstracts

Managed Care: A User's Guide

John R. Walton, RRT, FACHE Tuesday, November 5, 1996

Managed care can trace is prepaid medical care origins to the early 1900s. The concept of enticing health care providers to accept a set payment to keep a defined population healthy was actually a means of recruiting the frontier physician.

A broad definition of managed care is a insurance entity involved in healthy delivery. Differing forms of managed care include: the Preferred Provider Organization (PPO), the Health Maintenance Organization (HMO) and even hybrid structures such as the Point of Service (POS) plan. The HMO is the most prevalent and successful managed care type.

By the end of 1996, HMOs are expected to be the health insurance model for 60 million Americans (covered lives). This doubling of HMO enrollment since 1987 stems from three financial realities:

* the employer's need to reduce the health care premium costs, * the employee's acceptance of managed care restrictions in exchange for * lower out of pocket costs and fewer claim forms, and * the health care provider's reliance on maintaining an appreciable market * share even in the face of lower payments for each interaction.

HMOs initially achieve a lower cost (to both the employer and the employee) than other indemnity type insurance plans by:

* controlling utilization of health resources (e.g., pre-approvals for certain * procedures and steering services to lowest cost providers), * defining the amount paid to providers (e.g., fee schedules), and * pushing the financial risk to the provider (through capitation or incentive pool arrangements).

HMOs were the most profitable of the health industry segments until this past year.

While few could successfully argue a return to an unmanaged, fee for service health care system, HMOs are now grappling with two significant problems:

* past success in keeping costs down have propelled Medicaid, Medicare, and * even uninsured populations (all high health care users) into HMOs, and * growing demand on the part of both employers and enrollees to establish means of comparing HMO outcome track records to their respective premium costs.

To be successful in the future, HMOs must demonstrate positive outcomes on chronic diseases, improvement in health status through preventative measures and value for all segments of the population. Firms which embrace quality measures, encourage enrollee opinions and accept accountability for outcomes will most likely prevail.

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