Introduction
Managed care has become the primary health insurance coverage in the United States, covering approximately ninety percent of people with private health insurance (John Schneider, Oct. 5, 2004). Broadly defined, managed care is “a system that combines the functions of health insurance and the actual delivery of care, where costs and utilization of services are controlled” (Delivering Health Care in America, Shi & Singh). Managed care programs developed and evolved in response to the high cost of unmanaged healthcare. By managing patient services, insurers are able to reduce costs by eliminating unnecessary specialty visits, tests, and hospital stays as well as through provider contracts and networks.
The trend in health care toward service management has been instrumental in the shift to the wellness-based model of health. Preventive services offer the promise of cost savings to insurers through avoidance, thereby decreasing their risk of paying for costly future treatments. Although many medical practices still focus heavily on the medical model of health by emphasizing treatment of illness and disease rather than prevention, in recent years there has been incremental progress toward the wellness model.
Prior to Managed Care
Prior to managed care, indemnity or fee-for-service plans were the predominant health insurance models. This type of health insurance covered much of the cost of each treatment, offered the patient freedom in choosing providers, and usually did not require referrals for specialty care services (HMO Emergence: Effects on Physician Workforce, Sonya Davé). The focus of traditional health insurance was deeply entrenched in the medical model, as illustrated by the fact that most health plans typically did not pay for preventive services. As a result of this unmanaged care, health care costs escalated for both insurers and employers.
Evolution of Managed Care
Managed care emerged as an alternative to traditional insurance and promised to improve an ineffective system. The primary goals of managed care were to enhance the quality of care, improve patient access and reduce costs. Managed care companies began identifying factors that increased the cost of providing healthcare, including uncontrolled access to secondary and tertiary providers, as well as shifting cost losses from uninsured patients to their insured population (HMO Emergence: Effects on Physician Workforce, Sonya Davé). To address these issues, many companies established a gatekeeper system that required patient services to be managed by a primary physician, or generalist, first. They further set up networks of contracting secondary and tertiary providers that would render opinions and treatment only at the request of the primary physician. Since these physician networks were often contracted with the managed care company, they generally accepted assignment from fee schedules or received capitated reimbursements. These elements allowed insurers to greatly control and predict their costs.
Effects of Managed Care
Managed care has effectively controlled health care costs since its inception. The national health expenditures remained fairly consistent throughout the nineties at around twelve to thirteen percent of GDP expenditures (Managed Health Care Effects: Medical Care Costs and Access to Health Insurance, Frech, Langenfeld, Corbett). There has been a cost shift from insurance companies to enrollees and patients because premiums, deductibles and co-payments for services are generally higher. Additionally, if patients opt to receive out-of-network or denied services, the patient often assumes responsibility for payment in full.
Access to primary care physicians has increased significantly as preventive services have become more emphasized by managed care. Managed care companies are prompting their enrollees to act upon the suggested preventive care services that are offered. Such encouragement can be found on almost any managed care company or public health websites, which often have specific links to preventive care services and may offer a recommended schedule to follow to receive these services (Choosing Health Insurance, Iowa Department of Public Health). Access to secondary, tertiary, and quaternary care, however, has fallen under greater scrutiny by insurers and is generally perceived by many providers and enrollees to be more difficult to access. In this sense, access to care has been decreased.
Currently it is difficult to measure the impact of managed care on the quality of care for patients, as the amount of research performed to date is quite limited. J.D. Power and Associates is in the process of evaluating managed care organizations for specific customer satisfaction metrics based on six key areas. The program is being conducted through surveys sent to health plan members and measures their perceptions and opinions of their health plan based on claims processing, approval processes, information provided, provider choice, preventive care services, and customer service interactions. Based on member responses to these key areas, plans that meet or exceed the established national standard of service performance are qualified to become a Distinguished Health Plan (Distinguished Health Care Program, J.D. Power and Associates). Research such as this will be helpful in determining the quality of care that is provided for patients by managed care companies.
As a result of primary care referrals and claim review, providers are required to gather numerous documentations citing the reason for test or procedures, the patient history supporting medical treatment, medical research which supports treatment, etc., before medical services will be approved. Such information gathering is unpopular by provider groups because it can restrict their ability to provide services that they deem medically necessary (Delivering Health Care in America, Shi & Singh). Providers also often dislike negotiated reimbursement schedules. These reimbursement schedules sometimes motivate providers to pick service lines that will maximize their reimbursement resulting in fewer physicians that offer a full range of services.
How the Definition of Health has been Impacted by Managed Care
The definition of health was traditionally oriented toward the medical model. Emphasis was placed on medical treatment for disease and illness by physicians and insurance companies alike. Preventive services were generally not perceived as an important aspect of health care. Since managed care has taken the lead in providing health care coverage, the importance of preventive care has become more realized. As a result of managed care companies placing more emphasis on preventive care to avoid ill health in the future, patients have also adopted this focus and shifted their own definition of health. Although many patients still seek medical care only when an illness is present, the definition of health is incrementally evolving to the wellness based end of the health continuum.
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