Managed care
In the United States, managed care or managed healthcare is a group of activities intended to reduce the cost of providing health care and providing health insurance while improving the quality of that care. It has become the predominant system of delivering and receiving health care in the United States since its implementation in the early 1980s, and has been largely unaffected by the Affordable Care Act of 2010.
...intended to reduce unnecessary health care costs through a variety of mechanisms, including: economic incentives for physicians and patients to select less costly forms of care; programs for reviewing the medical necessity of specific services; increased beneficiary cost sharing; controls on inpatient admissions and lengths of stay; the establishment of cost-sharing incentives for outpatient surgery; selective contracting with health care providers; and the intensive management of high-cost health care cases. The programs may be provided in a variety of settings, such as Health Maintenance Organizations and Preferred Provider Organizations.
The growth of managed care in the U.S. was spurred by the enactment of the Health Maintenance Organization Act of 1973. While managed care techniques were pioneered by health maintenance organizations, they are now used by a variety of private health benefit programs. Managed care is now nearly ubiquitous in the U.S., but has attracted controversy because it has had mixed results in its overall goal of controlling medical costs. Proponents and critics are also sharply divided on managed care's overall impact on U.S. health care delivery, which underperforms in terms of quality and is among the worst with regard to access, efficiency, and equity in the developed world.
History
Dr. Paul Starr suggests in his analysis of the American healthcare system that Richard Nixon, advised by the "father of Health Maintenance Organizations", Dr. Paul M. Ellwood Jr., was the first mainstream political leader to take deliberate steps to change American health care from its longstanding not-for-profit business principles into a for-profit model that would be driven by the insurance industry. In 1973, Congress passed the Health Maintenance Organization Act, which encouraged rapid growth of Health Maintenance Organizations, the first form of managed care.Early origins
Before healthcare plans emerged, patients would simply pay for services out of pocket. In the period between 1910 and 1940, early healthcare plans formed into two models: a capitated plan, and a plan which paid service providers, such as the Blue Cross and Blue Shield Plans. One of the earliest examples is a 1910 "prepaid group plan" in Tacoma, Washington for lumber mills. Blue Cross and Blue Shield plans began in 1929 with a prepaid plan with Baylor Hospital, spreading to other hospitals over the next several decades; these plans were largely independent of each other and controlled by statewide hospitals and physicians until the 1970s, when they became nonprofits before being converted into for-profit corporations such as Anthem.1980s expansion and subdued inflation
Managed care plans are widely credited with subduing medical cost inflation in the late 1980s by reducing unnecessary hospitalizations, forcing providers to discount their rates, and causing the health care industry to become more efficient and competitive. Managed care plans and strategies proliferated and quickly became nearly ubiquitous in the U.S. However, this rapid growth led to a consumer backlash. Because many managed care health plans are provided by for-profit companies, their cost-control efforts are driven by the need to generate profits and not providing health care. In a 2004 poll by the Kaiser Family Foundation, a majority of those polled said they believed that managed care decreased the time doctors spend with patients, made it harder for people who are sick to see specialists, and had failed to produce significant health care savings. These public perceptions have been fairly consistent in polling since 1997. In response, close to 900 state laws were passed regulating managed care in the 1990s.The backlash featured vocal critics, including disgruntled patients and consumer-advocacy groups, who argued that managed care plans were controlling costs by denying medically necessary services to patients, even in life-threatening situations, or by providing low-quality care. The volume of criticism led many states to pass laws mandating managed-care standards.
1990s growth and ubiquity
By the late 1990s, U.S. per capita healthcare spending began to increase again, peaking around 2002. Despite managed care's mandate to control costs, U.S. healthcare expenditures have continued to outstrip the overall national income, rising about 2.4 percentage points faster than the annual GDP since 1970.Nevertheless, according to the trade association America's Health Insurance Plans, 90 percent of insured Americans are now enrolled in plans with some form of managed care. The National Directory of Managed Care Organizations, Sixth Edition profiles more than 5,000 plans, including new consumer-driven health plans and health savings accounts. In addition, 26 states have contracts with MCOs to deliver long-term care for the elderly and individuals with disabilities. The states pay a monthly capitated rate per member to the MCOs that provide comprehensive care and accept the risk of managing total costs.
Techniques
One of the most characteristic forms of managed care is the use of a panel or network of healthcare providers to provide care to enrollees. Such integrated delivery systems typically include one or more of the following:- Designated doctors and healthcare facilities, known as a provider network, which enrollees are required or incentivized to use
- Formal utilization review and quality improvement programs including disease management and case management
- An emphasis on preventive care including wellness incentives and patient education
Cost sharing
s are used by insurers to keep costs down by incentivizing consumers to select cheaper providers and possibly utilize less healthcare.Reference price schemes are another method to share costs, where a health insurer will only pay a certain amount and anything above that must be paid out of pocket.
Provider networks
Insurance plan companies, such as UnitedHealth Group, negotiates with providers in periodic contract negotiations; contracts may be discontinued from time to time. High-profile contract disputes can span provider networks across the nation, as in the case of a 2018 dispute between UnitedHealth Group and a major emergency room doctor group Envision Healthcare.Maintaining up-to-date provider directories is necessary as CMS can fine insurers with outdated directories. As a condition of participation, UnitedHealthcare requires that providers notify them of changes, but also has a Professional Verification Outreach program to proactively request information from providers. However, providers are burdened by having to maintain their information with multiple networks. The total cost of maintaining these directories is estimated at $2.1b annually, and a blockchain initiative began in 2018 to share the directory.
When patients receive care from doctors who are out of network, they can be subject to balance billing; this is particularly common in emergency or hospital care, where the patient may not be notified that a provider is out of network.
Utilization review
or utilization review is the use of managed care techniques such as prior authorization that allow payers to manage the cost of health care benefits by assessing its appropriateness before it is provided using evidence-based criteria or guidelines. UM criteria are medical guidelines which may be developed in house, acquired from a vendor, or acquired and adapted to suit local conditions. Two commonly used UM criteria frameworks are the McKesson InterQual criteria and MCG.Lawsuits
In the 21st century, commercial payers were increasingly using litigation against providers to combat alleged fraud or abuse. Examples included litigation between Aetna and a group of surgical centers over an out-of-network overbilling scheme and kickbacks for referrals, where Aetna was ultimately awarded $37 million. While Aetna has led the initiative, other health insurance companies have engaged in similar efforts.Organizations
There is a continuum of organizations that provide managed care, each operating with slightly different business models. Some organizations are made of physicians, and others are combinations of physicians, hospitals, and other providers. Here is a list of common organizations:- Group practice without walls
- Independent practice association
- Management services organization
- Physician practice management company
Industry in the United States
Smaller regional or startup plans are offered by Oscar Health, Moda Health, and Premera.
Provider-sponsored health plans can form integrated delivery systems; the largest of these as of 2015 was Kaiser Permanente.
Kaiser Permanente was the highest-ranked commercial plan by consumer satisfaction in 2018 with a different survey finding it tied with Humana.
As of 2017, Medicaid and Medicare have become an increasingly large part of the private health insurance industry, particularly with the rise of Medicare Advantage programs. As of 2018, two-thirds of Medicaid enrollees are in plans administered by private companies for a set fee. These may involve some sort of value-based system; in addition, the contracted companies may be evaluated on population health statistics, as in the case of California's Medi-Cal which tasked its companies with improving the health of its members.