Chapter 3: Managed Health Care
case manager
(e.g., physician, physician's assistant, nurse practitioner, nurse, or social worker) submits written confirmation, authorizing treatment, to the provider
Preferred Provider Organization (PPO)
(sometimes called a participating provider organization) is a managed care network of physicians and hospitals that have joined together to contract with insurance companies, employers, or other organizations to provide health care to subscribers for a discounted fee. ______s do not routinely establish contracts for laboratory or pharmacy services, but they do offer reduced-rate contracts with specific hospitals. Most _____s are open-ended plans allowing patients to use non-_____ providers in exchange for larger out-of-pocket expenses. Premiums, deductibles, and copayments are usually higher than those paid for HMOs, but lower than those paid for regular fee-for-service plans.
Allowed federally qualified HMOs to permit members to occasionally use non-HMO physicians and be partially reimbursed
Amendment to the HMO Act of 1973
The Balanced Budget Act of 1997 (BBA): ●Encouraged formation of provider service networks (PSNs) and provider service organizations (PSOs) ●Mandated risk-based managed care organizations to submit encounter data related to inpatient hospital stays of members ●Established the Medicare+Choice program, which expanded Medicare coverage options by creating managed care plans to include HMOs, PPOs, and MSAs (now called Medicare Advantage or Medicare Part C) ●Required organizations to implement a quality assessment and performance improvement (QAPI) program so that quality assurance activities are performed to improve the functioning of M+C organizations
BBA (1997)
The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) established an employee's right to continue health care coverage beyond the scheduled benefit termination date (including HMO coverage)
COBRA (1985)
The 21st Century Cures Act requires the submission of a report on the risk adjustment model and the End-Stage Renal Disease (ESRD) risk adjustment model under the Medicare Advantage program every three years. (The first report was submitted by December 31, 2018.) Risk adjustment is a method of adjusting capitation payments to health plans, accounting for differences in expected health costs of enrollees. Commercial insurers determine revenue needs based on trends in medical expenditures, benefits offered, and anticipated enrollment, and then determine how to set premiums, deductibles, and copayment and coinsurance amounts. The Medicare Advantage risk adjustment models are more comprehensive in that diagnoses and demographic information are used to adjust each enrollee's monthly capitation rate to account for expected costs associated with age, gender, and conditions. At the individual (enrollee) level, predicted medical costs can be lower or higher than actual medical costs. At the group (of enrollees) level, below-average predicted costs balance out above-average predicted costs. Thus, risk adjustment is intended to be accurate at the group level
Cures Act (2016)
The Employee Retirement Income Security Act of 1974 (ERISA) mandated reporting and disclosure requirements for group life and health plans (including managed care plans).
ERISA (1974)
The Healthcare Effectiveness Data and Information Set (HEDIS): ●Is developed by the National Committee for Quality Assurance (NCQA) ●Created standards to assess managed care systems in terms of membership, utilization of services, quality, access, health plan management and activities, and financial indicators
HEDIS (1989)
●Effectiveness of Care ●Access/Availability of Care ●Experience of Care ●Utilization and Risk Adjusted Utilization ●Health Plan Descriptive Information ●Measures Collected Using Electronic Clinical Data Systems
HEDIS measures address six domains of care:
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) created federal standards for insurers, HMOs, and employer plans, including those who self-insure.
HIPPA (1996)
The Health Maintenance Organization (HMO) Assistance Act of 1973: ●Authorized grants and loans to develop HMOs under private sponsorship ●Defined a federally qualified HMO (certified to provide health care services to Medicare and Medicaid enrollees) as one that has applied for and met federal standards established in the HMO Act of 1973 ●Required most employers with more than 25 employees to offer HMO coverage if local plans were available
HMO Assistance Act (1973)
The Medicare Prescription Drug, Improvement, and Modernization Act (MMA) (or Medicare Modernization Act): ●Amended the Internal Revenue Code of 1986 to allow a deduction to individuals for amounts contributed to health savings security accounts and health savings accounts, and to provide for the disposition of unused health benefits in cafeteria plans and flexible spending arrangements ●Renamed the Medicare+Choice program Medicare Advantage (also referred to as Medicare Part C) ●Established the Medicare prescription drug benefit (Medicare Part D) ●Established health savings accounts (HSAs) to replace medical savings accounts (MSAs)
MMA (2003)
case management
Managed care plans also require the development of patient care plans for the coordination and provision of care for complicated cases in a cost-effective manner, which is called
A medical savings account (MSA), now called health savings account (HSA), allows individuals to withdraw tax-free funds for health care expenses that are not covered by a qualifying high-deductible health plan. Health care expenses that may be reimbursed from the MSA include the following: ●Dental expenses, including uncovered orthodontia ●Eye exams, contact lenses, and eyeglasses ●Hearing care expenses ●Health plan deductibles and copayments ●Prescription drugs
Medical Savings Accounts (1997)
The Omnibus Budget Reconciliation Act of 1981 (OBRA) provided states with flexibility to establish HMOs for Medicare and Medicaid programs, resulting in increased managed care enrollment.
OBRA (1981)
Established as an office of HCFA (now called CMS) to facilitate innovation and competition among Medicare HMOs
Office of Managed Care (1994)
The Patient Protection and Affordable Care Act (PPACA) implemented the risk adjustment program to lessen or eliminate the influence of risk selection on premiums charged by health plans and includes the: (1)Risk adjustment model, which provides payments to health plans that disproportionately attract higher-risk enrollees (e.g., individuals with chronic conditions). It uses an actuarial tool to predict health care costs based on the relative actuarial risk of enrollees in risk adjustment covered health plans. For example, the HHS-Hierarchical Condition Categories (HHS-HCC)risk adjustment model uses a hierarchical condition category (HCC) system to summarize diagnosis codes into levels of severity for calculating risk scores. (2)Risk transfer formula, which transfers funds from health plans with relatively lower risk enrollees to health plans that enroll relatively higher risk individuals, protecting such health plans against adverse selection. Enrollee risk scores are based on demographic and health status information, and it is calculated as the sum of demographic and health factors, weighted by estimated marginal contributions to total risk, and calculated relative to average expenditures. Thomson Reuters MarketScan® data is the primary source for risk adjustment model calibration, and its database includes data from all 50 states.
PPACA (2020)
●Eased restrictions on preferred provider organizations (PPOs) ●Allowed subscribers to seek health care from providers outside of the PPO
Preferred Provider Health Care Act of 1985
●In 1997, Texas was the first state to enact legislation allowing consumers to sue an HMO for medical malpractice. (Other states have since passed similar legislation.) ●Other state-enacted legislation since 1997 includes that relating to mandated benefits, high-risk pools, method and philosophy of treatment for Alzheimer's disease, Medicaid eligibility, banning financial incentives, independent appeals measures, insuring liability, and prompt payment
State managed care legislation (1997)
The Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA): ●Modified the HMO Act of 1973 ●Created Medicare risk programs, which allowed federally qualified HMOs and competitive medical plans that met specified Medicare requirements to provide Medicare-covered services under a risk contract ●Defined risk contract as an arrangement among providers to provide capitated (fixed, prepaid basis) health care services to Medicare beneficiaries ●Defined competitive medical plan (CMP) as an HMO that meets federal eligibility requirements for a Medicare risk contract but is not licensed as a federally qualified plan
TEFRA (1982)
●Managed care organizations ●Managed care models ●Consumer-directed health plans ●Accreditation of managed care organizations
The administration of managed care includes:
NCQA's Committee on Performance Measurement
a broad-based group representing employers, consumers, health plans and others, debates and decides collectively on the content of HEDIS. This group determines what HEDIS measures are included and field tests determine how it gets measured.
enrollees
also called subscribers (policyholders), who are employees and dependents who join a managed care plan and are also known as beneficiaries in private insurance plans
utilization review organization (URO)
an entity that establishes a utilization management program and performs external utilization review services
Third Party Administrator (TPA)
an organization that provides health benefits claims administration and other outsourced services (e.g., employee benefits management) for self-insured companies
utilization management (utilization review)
as a method of controlling health care costs and quality of care activities include preadmission certification (PAC) or preadmission review, preauthorization, concurrent review, and discharge planning
gatekeeper
by providing essential health care services at the lowest possible cost, avoiding nonessential care, and referring patients to specialists
Health care is provided in an HMO-owned center or satellite clinic or by physicians who belong to a specially formed medical group that serves the HMO.
closed-panel HMO
managed health care (managed care)
combines health care delivery with the financing of services provided.
●Tax-exempt account, which is used to pay for health care expenses and provides more flexibility than traditional managed care plans in terms of access to providers and services ●Out-of-pocket payments for health care expenses, which are made after the tax-exempt account is expended and before the deductible for high-deductible insurance has been met; this tier actually represents a gap in coverage ●High-deductible insurance policy, which reimburses allowable health care expenses after the high deductible has been paid
consumer-directed health plans (CDHPs) include the following tiers:
●Health care expenses are funded by insurance coverage; the individual selects one of each type of provider to create a customized network and pays the resulting customized insurance premium. ●Each provider is paid a fixed amount per month to provide only the care that an individual needs from that provider (sub-capitation payment).
customized sub-capitation plan (CSCP)
Consumer-Directed Health Plan (CDHP)
define employer contributions and ask employees to be more responsible for health care decisions and cost-sharing. You might think of a ______ as a sort of "401(k) plan for health care" (recalling the shift from employer defined-benefit pension plans to employer defined-contribution 401(k) plans). _________ include many choices that provide individuals with an incentive to control the costs of health benefits and health care. Individuals have greater freedom in spending health care dollars, up to a designated amount, and receive full coverage for in-network preventive care. In return, individuals assume significantly higher cost-sharing expenses after the designated amount has been expended. (The catastrophic limit is usually higher than those common in other plans.) ______ have become a popular alternative to the increased costs of traditional health insurance premiums and the limitations associated with managed care plans usually provide Internet-based support so individuals can track health care expenses, improve their health by viewing useful information and learning about preventive services, obtain information about provider quality, and receive notification about provider group-rate pricing. Various ______ are available to individuals, all of which are subject to modification as legislation is passed and payers alter program requirements
Contracted health care services are delivered to subscribers by individual physicians in the community
direct contract model HMO
group practice without walls (GPWW)
establishes a contract that allows physicians to maintain their own offices and share services (e.g., appointment scheduling and billing)
The National Committee for Quality Assurance (NCQA)
evaluates managed care organizations of Washington, DC, is a private, not-for-profit organization that assesses the quality of managed care plans in the United States and releases the data to the public for consideration when selecting a managed care plan. The _____ began accrediting managed care programs in 1991 when a need for consistent, independent information about the quality of care provided to patients was originally identified. reviews managed care plans and develops report cards to allow health care consumers to make informed decisions when selecting a plan.
●Tax-exempt accounts that are offered by employers to any number of employees, which individuals use to pay health care bills. ●Employees contribute funds to the FSA through a salary reduction agreement and withdraw funds to pay medical bills. ●Funds in an FSA are exempt from both income tax and Social Security tax (employers may also contribute to FSAs). ●Per the PPACA, employers can allow employees to carry over up to $500 of unspent funds remaining in the FSA at the end of the year or a have grace period of up to two and a half months (but neither is required)
flexible spending account (FSA)
Contracted health care services are delivered to subscribers by participating physicians who are members of an independent multispecialty group practice. The HMO reimburses the physician group, which is then responsible for reimbursing physician members and contracted health care facilities (e.g., hospitals). The physician group can be owned or managed by the HMO, or it can simply contract with the HMO
group model HMO
●Tax-exempt account that is used to pay for health care expenses. ●Individual decides, in advance, how much money to deposit in the HCRA (unused funds are forfeited)
health care reimbursement account (HCRA)
●Tax-exempt accounts that are offered by employers with 50 or more employees, which individuals use to pay health care bills. ●U.S. Treasury Department and Internal Revenue Service issued tax guidance information for HRAs in 2002. ●Money must be used for qualified health care expenses and allows individuals to accumulate unspent money for future years. ●If an employee changes jobs, the HRA can continue to be used to pay for qualified health care expenses
health reimbursement arrangement (HRA)
●Participants enroll in a relatively inexpensive high-deductible insurance plan, and a tax-deductible savings account is opened to cover current and future medical expenses. ●Money deposited (and earnings) is tax-deferred, and money withdrawn to cover qualified medical expenses is tax-free. ●Money can be withdrawn for purposes other than health care expenses after payment of income tax plus a 20-percent penalty. ●Unused balances "roll over" from year to year; if an employee changes jobs, the HSA can continue to be used to pay for qualified health care expenses
health savings account (HSA); health savings security account (HSSA)
self-referral
if the enrollee sees a non-managed care panel specialist without a referral from the primary care physician, this is known as a The enrollee will have greater out-of-pocket expenses, as both a large deductible (usually $200 to $250) and 20 to 25 percent coinsurance charges must be paid, similar to those paid by persons with fee-for-service plans
physician incentives
include payments made directly or indirectly to health care providers to encourage them to reduce or limit services (e.g., discharge an inpatient from the hospital more quickly) so as to save money for the managed care plan.
quality assurance program
includes activities that assess the quality of care provided in a health care setting.
Also called independent practice association (IPA) HMO, contracted health services are delivered to subscribers by physicians who remain in their independent office settings. The IPA is an intermediary (e.g., physician association) that negotiates the HMO contract and receives and manages the capitation payment from the HMO, so that physicians are paid on either a fee-for-service or capitation basis.
individual practice association (IPA) HMO
exclusive provider organization (EPO)
is a managed care plan that provides benefits to subscribers who are required to receive services from network providers are regulated by state insurance departments
risk adjustment
is a method of adjusting capitation payments to health plans, accounting for differences in expected health costs of enrollees
medical foundation
is a nonprofit organization that contracts with and acquires the clinical and business assets of physician practices; the foundation is assigned a provider number and manages the practice's business.
network provider
is a physician or health care facility under contract to the managed care plan.
accreditation
is a voluntary process that a health care facility or organization (e.g., hospital or managed care plan) undergoes to demonstrate that it has met standards beyond those required by law. ________ organizations develop standards (requirements) that are reviewed during a survey (evaluation) process that is conducted both offsite (e.g., managed care plan submits an initial document for review) and onsite (at the managed care plan's facilities)
health maintenance organization (HMO)
is an alternative to traditional group health insurance coverage and provides comprehensive health care services to voluntarily enrolled members on a prepaid basis.
Integrated Delivery System (IDS)
is an organization of affiliated providers' sites (e.g., hospitals, ambulatory surgical centers, or physician groups) that offer joint health care services to subscribers. Models include physician-hospital organizations, management service organizations, group practices without walls, integrated provider organizations, and medical foundations may also be referred to by any of the following names: integrated service network (ISN), delivery system, vertically integrated plan (VIP), vertically integrated system, horizontally integrated system, health delivery network, or accountable health plan
risk pool
is created when a number of people are grouped for insurance purposes (e.g., employees of an organization); the cost of health care coverage is determined by employees' health status, age, sex, and occupation
Physician-Hospital Organization (PHO)
is owned by hospital(s) and physician groups that obtain managed care plan contracts; physicians maintain their own practices and provide health care services to plan members
Primary Care Provider (PCP)
is responsible for supervising and coordinating health care services for enrollees and approves referrals to specialists and inpatient hospital admissions (except in emergencies). The PCP serves as a gatekeeper by providing essential health care services at the lowest possible cost, avoiding nonessential care, and referring patients to specialists.
Managed Care Organization (MCO)
is responsible for the health of a group of enrollees and can be a health plan, hospital, physician group, or health system
management service organization (MSO)
is usually owned by physicians or a hospital and provides practice management (administrative and support) services to individual physician practices
traditional health insurance coverage
is usually provided on a fee-for-service basis in which reimbursement increases if the health care service fees increase, if multiple units of service are provided, or if more expensive services are provided instead of less expensive ones (e.g., brand-name versus generic prescription medication)
1.Exclusive provider organization (EPO) 2.Integrated delivery system (IDS) 3.Health maintenance organization (HMO) a.Direct contract model b.Group model c.Individual (or Independent) practice association (IPA) d.Network model e.Staff model 4.Point-of-service plan (POS) 5.Preferred provider organization (PPO) 6.Triple option plan
managed care can now be categorized according to six models:
exclusive provider organizations, integrated delivery systems, health maintenance organizations, point-of-service plans, preferred provider organizations, and triple option plans
managed care is categorized according to six models:
●Separate bookkeeping systems for each capitated plan to ensure financial viability of the contract ●A tracking system for preauthorization of specialty care and documented requests for receipt of the specialist's treatment plan or consultation report ●Preauthorization and/or precertification for all hospitalizations and continued certification if the patient's condition requires extension of the number of authorized days ●Up-to-date lists for referrals to participating health care providers, hospitals, and diagnostic test facilities used by the practice ●Up-to-date lists of special administrative procedures required by each managed care plan contract ●Up-to-date lists of patient copayments and fees for each managed care plan contract ●Special patient interviews to ensure preauthorization and to explain out-of-network requirements if the patient is self-referring ●Additional paperwork for specialists to complete and the filing of treatment and discharge plans ●Some case managers employed by the MCO to monitor services provided to enrollees and to be notified if a patient fails to keep a preauthorized appointment ●The attachment of preauthorization documentation to health insurance claims submitted to some MCOs
managed care organizations (MCOs) impact a practice's administrative procedures by requiring:
integrated provider organization (IPO)
manages the delivery of health care services offered by hospitals, physicians (who are employees of the _____), and other health care organizations (e.g., an ambulatory surgery clinic and a nursing facility).
Contracted health care services are provided to subscribers by two or more physician multispecialty group practices
network model HMO
report card
ontains data regarding a managed care plan's quality, utilization, customer satisfaction, administrative effectiveness, financial stability, and cost control.
Health care is provided by individuals who are not employees of the HMO or who do not belong to a specially formed medical group that serves the HMO.
open-panel HMO
physician incentive plan
requires managed care plans that contract with Medicare or Medicaid to disclose information about physician incentive plans to CMS or state Medicaid agencies before a new or renewed contract receives final approval.
The Healthcare Effectiveness Data and Information Set (HEDIS)
sponsored by the National Committee for Quality Assurance, consists of performance measures used to evaluate managed care plans (e.g., rate of Pap smears performed among women of a certain age).
Health care services are provided to subscribers by physicians employed by the HMO. Premiums and other revenue are paid to the HMO. Usually, all ambulatory services are provided within HMO corporate buildings
staff model HMO
Second Surgical Opinion (SSO)
that is, a second physician is asked to evaluate the necessity of surgery and recommend the most economical, appropriate facility in which to perform the surgery (e.g., outpatient clinic or doctor's office versus inpatient hospitalization)
quality improvement system for managed care (QISMC)
to ensure the accountability of managed care plans in terms of objective, measurable standards (requirements)
external quality review organization (EQRO)
to review health care provided by managed care organizations. The types of ______ performed include government oversight, patient satisfaction surveys, data collected from grievance procedures, and reviews conducted by independent organizations.
Point of Service Plan (POS)
under which patients have freedom to use the managed care panel of providers or to self-refer to out-of-network providers. If enrollees choose to receive all medical care from the managed network of health care providers, or obtain an authorization from their POS primary care provider for specialty care with an out-of-network provider, they pay only the regular copayment or a small charge for the visit and they pay no deductible or coinsurance costs.
capitation
which accept a predetermined per member per month payment for services. where providers accept preestablished payments for providing health care services to enrollees over a period of time (usually one year)
HMOs (Health Maintenance Organization)
which are regulated by either the state commerce or department of corporations, depending on state requirement provide preventive care services to promote "wellness" or good health, thus reducing the overall cost of medical care often require a copayment (or copay), which is a fee paid by the patient to the provider at the time health care services are rendered. Copayments range from $1 to $35 per visit, and some services are exempt because coinsurance payments are required instead. There are five ______ models : direct contract model, group model, individual practice association, network model, and staff model
triple option plan
which is usually offered either by a single insurance plan or as a joint venture among two or more insurance payers, provides subscribers or employees with a choice of HMO, PPO, or traditional health insurance plans. It is also called a cafeteria plan (or flexible benefit plan) because of the different benefit plans and extra coverage options provided through the insurer or third-party administrator. ______ are intended to prevent the problem of covering members who are sicker than the general population (called adverse selection)
Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey
which measures members' satisfaction with their care in areas such as claims processing, customer service, and getting needed care quickly
gag clauses
which prevent providers from discussing all treatment options with patients, whether or not the plan would provide reimbursement for services
fee-for-service plans
which reimburse providers for individual health care services rendered, managed care is financed according to a method called capitation, where providers accept preestablished payments for providing health care services to enrollees over a period of time (usually one year)
