Chapter 27 Managed care Flashcards
What are the key objectives/aims of managed care? (7)
Objectives of managed care
- manage risk
- reduce costs of medical events/manage claims costs while maintaining or even improving access to quality healthcare services
- maintain the affordability of healthcare by ensuring its cost-effectiveness
- improve quality of healthcare given by
- ensuring that medical services are delivered in an appropriate setting
- ensuring that high-risk members are managed and receive appropriate care
- reducing the number of unnecessary medical services
What is a managed care organisation? (2)
A managed care organisation is a
- for profit organisation that
- uses clinical and statistical/financial techniques to achieve the objectives of managed care
Give examples of risks that managed care helps to reduce/manage (5)
- Price risk: risk that fee received by provider does not cover expenses/contribution to profit
- Intensity risk: risk that more services are needed than anticipated
- Severity risk: risk that cases are more severe than anticipated.
- Frequency risk: risk that more people need treatment than anticipated.
- Actuarial and marketing risk: risk demographics are not as anticipated, thus pricing is incorrect.
List some strategies used by managed care organisations to meet its objectives and minimise risk ().
- Provider networks
- restricting access to a select network of specialists and GPs, with whom preferential charging structures have been agreed.
- Reimbursment methods
- Risk sharing
- Risk adjustment
- Formularies in managed care
- i.e. a restrictive formulary governing which medicines may be used for certain conditions
- Protocol in managed care
- e.g. a requirement for a GP referral to be obtained prior to visiting a specialist
Managed care strategies: provider networks
How can provider networks be used to manage risks? (2)
List 3 key steps involved in setting up the desired provider network (3)
The use of provider networks
- restricts members to obtain healthcare services from a specified network of participating provider (ie the provider network).
- such restrictions are used to manage costs in low-income benefit options.
In setting up the provider network,
- determine geographic spread of members
- choose hospitals that would best serve needs
- then negotiate with those hospitals
Managed care strategies: reimbursement methods
What do we mean by reimbursement methods in a healthcare context? (2)
What 2 key requirements are needed for successful operation and implementation of reimbursement methods? (2)
Reimbursement methods
- are an alternative to ‘fee for service’ model
- structure payments to providers in way that encourages them to provide high quality but cost effective healthcare.
Success operation of reimbursement methods requires:
- adequate/reliable clinical data: allows risk taker to ensure treatment complies with the specified clinica protocols and cost benchmarks.
- control cycle: to ensure clinical protocols are modified based on feedback following an analysis of the outcomes acheived.
Managed care strategies: risk sharing
What issue arises with using reimbursement methods to manage risks? (1)
In what way is risk sharing a solution to this? (2)
Give examples of ways in which risk sharing can be done (6)
Issue with reimbursement methods:
- It’s not sufficient to design reimbursement arrangements in isolation as it only involves risk transfer to the healthcare providers. We must still cater to users’ needs.
Risk sharing might be a solution
- by developing sustainable contracts where all parties accept the risks and share in benefits.
- it incentivises healthcare providers to manage risk as well
The following principles can be used to effect risk sharing
- natural response to principles being aligned with vs. desired objectives
- rewards being consistent with few, simple, realistic goals
- provider involvement/partnership in setting/meeting goals
- incentives: negative incentives/positive incentives
- education/support
- adjusting for health risk of patients to emphasize effeciency of healthcare providers
What are negative incentives in the context of managed care strategies? (4)
Essentially ‘punishes’ participants within a managed care programe for failure to meet agreed goals
- A fee schedule or other payment rate is negotiated with providers
- The initial provider payment is then set at a lesser amount, such as 85% of fee schedule.
- Some or all of the withheld amounts will be paid if funds exist at the end of an accounting period.
What are positive incentives in the context of managed care strategies? (4)
Essentially ‘rewards’ participants within a managed care programe if they are able to meet agreed goals
- Surplus under this arrange is shared between funders and providers.
- Surplus = contributions > costs.
- This surplus is generated by costs being reduced due to cost being reduced below target levels
Risk adjustment
What is the point of risk adjustment? (2)
In what context is risk adjustment particularly important? (3)
The point of risk adjustment is to
- adequately account for the health risk of patients which have been treated..
- …so that the efficiency of their treatment is comparable on on a ‘like for like’ basis, to obtain true measure of healthcare provider’s efficiency
Risk adjustment is particularly important
- under alternative reimbursement arrangements, where providers are reimbursed/remunerated based on health risk of their patients
- instead of encouraging providres to compete based on health status of patients they’re incentivised based on efficiency and quality of care provided
- reduces negative financial impact for insitutions receiving high risk patients
Managed care strategies: formularies and protocols
What is a formulary? (1)
How are formularies and protocols used in managed care? (2)
A formulary is a list of medicines.
Managed care organisations use prescribed or constructed formularies and protocols to ensure that appropriate and cost effective drugs are prescribed.
Managed care strategies: protocols, development of treatment protocols
Briefly list the most important points to consider when developing treatment protocols used within managed care frameworks (5)
- It is important that managed care organisations collaborate with medical experts to develop credible and recognised protocols, based on clinical best practice.
- Managed care protocols need to be updated continually as new medicines and treatments are being made available.
- This is mainly due to technological advances and new disease emerging over time.
- The more restrictive a managed care is the higher the potential cost-savings.
- However, they will also have to comply with the regulations insofar as they cannot unreasonably restrict access to healthcare for policyholders.
Managed care strategies: protocols, cost-effectiveness analysis in developing protocols
What key factor typically influences decisions regarding inclusion (or not) of certain medicines in treatment protocols used by managed care? (4)
What balance needs to be struck between including/excluding certain treatments in/from treatment protocols, and the quality of healthcare that aims to be provided by managed care (4)
Cost effectivness of treatments plays an important role in developing treatment protocols
- Very often, cost-effectiveness decisions for medicines used in protocols will be influenced by the results of international clinical trials.
- For treatments where the expected cost of prevention exceeds the costs of treatment, the benefit offered by these medicines is significantly greater than its costs, meaning their inclusion as part of medicine formularies is easily justified.
A balance must be struck between the inclusion/exclusion of treatments based on cost-effectivness and the quality of care
- it is possible that very restrictive formulaires restrict access to quality healthcare.
- it is the role of legislation to ensure that managed care is not abused to unfairly exclude lives that need medical aid coverage, or to unfairly exclude access to required treatments.
Managed care strategies: risk of abuse in managed care protocols
What key risk arises through the use of protocols in managed care? (4)
There is risk that managed care protocols can be abused beyond the aim of controlling healthcare costs.
- It is possible some insurers to use managed care as a means to exclude relatively unhealthy lives.
- This is an abuse of managed care since
- the aim of managed care should be coverage of expensive treatments for diseases on an affordable basis…
- …rather than the exclusion of lives with the respective disease.
List some patient concerns which may arise due to the use of managed care within a health system (4)
- provider networks may restrict access to care
- providers may resent external parties imposing clinic protocols on them and influencing the way in which they practice medicine.
- managed care may compromise the quality of care provided to patients eg encourage underservicing to save costs
- the use of formularies and other financial-based managed care initiatives may result in the additional cost being transferred from the scheme to the member with no overall cost reduction.
