Upon successful completion of this module, the student will be able to satisfy the following outcomes:
Basically, managed care and managed care organizations (MCOs) was championed as a powerful force for containing healthcare costs. We will see that this is not necessarily the case. We will also see that managed care brings up a range of structural issues related to price fixing and market power.
In the United States after World War II, healthcare was based on an indemnity model or fee for service. In this case health insurers simply paid the bills for services ordered by physicians. These traditional plans provided few incentives for cost containment medical decisions.
Responding to the lack of cost containment measures in the indemnity model, private insurers began to “manage care” by exerting influence on the decisions made by physicians. Managed care is the process of structuring or restructuring the healthcare system in terms of financing, purchasing, delivering, measuring, and documenting a broad range of healthcare services and products.
Sometimes this process of restructuring took the form of bureaucratic rules, e.g. requiring physicians to seek administrative approval before proceeding with certain procedures. In other cases, financial incentives were used to shape physician behavior. By the mid 1990’s, “managed care” had become the dominant form of private sector health insurance.1
Today managed care organization (MCO) is a general term used to describe any number of health insurance arrangements that are intended to reduce unnecessary healthcare 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; and the intensive management of high-cost healthcare cases.
Managed care organizations are structured with an imperative to consider both the impact on costs and also the impact on doctors’ decisions whether to join their networks.
These considerations by MCOs to both contain costs and attract physicians are influenced by the values and practices that physicians bring to healthcare. Physicians want to earn a living but not at the risk of endangering the lives they are meant to serve. These healthcare values held by physicians pose a strategic dilemma for managed care organizations needing to contain costs and attract physicians to assemble provider networks.
Low cost MCOs with contract restrictions on spending are seen as highly restrictive. On the other hand, MCOs with large physician networks write cost containment rules into contracts that are not overly burdensome.
It is interesting to think about how MCOs balance competing interests and ethical issues in cost containment, physician ideals, and quality of care.
There are a wide variety of managed care models that integrate financing and management with the delivery of healthcare services to an enrolled population.
Health Maintenance Organizations: HMOs are organized healthcare systems that are responsible for both the financing and the delivery of a broad range of comprehensive health services to an enrolled population. HMOs act both as insurer and provider of healthcare services. They charge employers a fixed premium for each subscriber. An independent practice association (IPA)-model HMO provides medical care to its subscribers through contracts it establishes with independent physicians. In a staff-model HMO, the physicians would normally be full-time employees of the HMO. Individuals who subscribe to an HMO are often limited to the panel of physicians who have contracted with the HMO to provide services to its subscribers.
Preferred provider organizations (PPOs) are entities through which employer health benefit plans and health insurance carriers contract to purchase healthcare services for covered beneficiaries from a selected group of participating providers. Most states have specific PPO laws that directly regulate such entities.
Exclusive provider organizations (EPOs) limit their beneficiaries to participating providers for any healthcare services. EPOs use a gatekeeper approach to authorize non–primary care services. The primary difference between an HMO and an EPO is that the former is regulated under HMO laws and regulations, whereas the latter is regulated under insurance laws and regulations.
These integrated health delivery organizations raise a variety of issues with the Department of Justice and the Federal Trade Commission. The issues include price fixing and antitrust problems based on market power.
Depending on how the groups are organized- horizontal versus vertical- and who is integrated- competing physician groups or a multi provider network a MCO may violate several antitrust laws.
Whenever an MCO possesses significant market power or deals with a group that has significant market power, antitrust implications should be considered. To determine market power, it is necessary first to identify the market in which the entity exercises power. For antitrust purposes, the relevant market has two components: (1) a product component and (2) a geographic component.
Price fixing is considered a per se violation of the antitrust laws. Per Se Violations conclusively violate antitrust laws and means there is no further investigation of its effects on the competitiveness of the market because its intentions are so obvious. A Per Se Violation would almost always limit competition and decrease productivity. Activities that fall under per se violations are acts such as horizontal price fixing and horizontal market division.
Price fixing occurs when two or more competitors come together to decide on a price that will be charged for services or goods. The per se rule applies to restraints in trade that are so inimical to competition and so unjustified that they are presumed to be unreasonable and, therefore, are illegal.
1Aaron, Henry J. and Reischauer, Robert D., (1995) “The Medicare Reform Debate: What is the Next Step?” Health Affiars. 14:4. p.8-30.
Try it now!
How it works?
Follow these simple steps to get your paper done
Place your order
Fill in the order form and provide all details of your assignment.
Proceed with the payment
Choose the payment system that suits you most.
Receive the final file
Once your paper is ready, we will email it to you.
Ace Writing Center has stood as the world’s leading custom essay writing services providers. Once you enter all the details in the order form under the place order button, the rest is up to us.
At Ace Writing Center, Nowadays, students normally have extremely busy schedules. You will note that some of them have to take on some evening or weekend jobs in order to get some income that can help them to sustain in college or in the university. This can deny them a chance to write all the essays given. Others usually get bombarded with a lot of work by their lecturers. This can still delay such students from working on all their essays. However, some of them usually try to work on all these essays but end up delivering their work late. This can prevent them from graduating since most lecturers are strict on deadlines. If you want to write a business essay, the wise way is to hire an outstanding essay writing service like us, so that you can get the best results. If you are keen, you will note that many companies usually overcharge their customers. Some of them are there only to make money. And in reality, they really don’t care to build a long term commitment with students. You should not choose such companies. You should take your time and choose a reliable company to work with. Ace Writing Center is the ultimate solution for you. We have been offering our writing service for more than 7 years. This is a clear indication that you will get quality essay writing service. We have a wide range of writers who can work on any business essay that you might have. We believe in doing extensive research so that we can provide quality work to all our clients. .
Admission and Business Papers
Have you ever had to write an admission essay for college? The majority of students face the same issues when applying to a university or college and many in such situations decide they need professional help to cope with this matter. They get in a situation when the deadline keeps coming closer but lack motivation to start because they are just not sure if their writing skills are strong enough. We have a solution for you! Ace Writing Center is the best admission essay writing service with a large professional team and years of experience in providing high-quality papers to students of all levels and faculties. The mission of our team is to help students make their dreams of entering a good college come true and that’s what we offer!.
Editing and Proofreading
Sometimes all the words for your paper just flow out of your mind and into your fingers. You type quickly at your keyboard and there they are, your beautiful words right there on the screen. But you have no idea how to polish it up. You may be wishing there was a paper writing service that offered this type of writing service. Look no more! Here at Ace Writing Center, we offer you an editing and proofreading option that you can't find anywhere else..
College Essay Writing
In case you are familiar Ace Writing Center, you know the way to distinguish a better company from a cheap one exactly. First of all, poor service website does not have a sufficient support. We think support team is an essential part of success; it has to answer all clients’ questions and be a connecting link between clients and their writers. On our web-service you will get answers about anything you need and your writer will receive all your instructions, assignments and requirements exactly and swiftly. A writing service that we run has got a flexible pricing system that will save you from senseless wastes and many bonus systems that let you sparing money for something important for you.