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Description
You are a new physician setting up your own practice in a new town. You are researching the different MCOs
offered in your area and are considering becoming a physician for one of these networks. You have also invited
the sales representatives of several health plans to speak with you about the benefits of choosing their plans.
Based on the above scenario answer the following questions:
What effects would joining a MCO have on your clinic regarding staffing patient volume and financial
stability
What policies and procedures should be used by the MCOs to reduce costs for their clientele
Discuss the ethical issues or concerns about MCOs providing a lower quality of care compared to traditional feefor service
(FFS) organizations
What are some of the questions you would ask each representative about his or her companys specific plan that
will help you make a decision
Do you believe that the evolution of MCOs and consumer driven health plans (CDHPs) has affected the
healthcare environment today by integrating the financing and delivery of healthcare services If yes how
How have the roles and relationships between physicians and patients changed by each of these types of plans
Reading For Assignment
Cost Containment in Managed Care
Payment systems based on resource use have been designed and implemented for other providers of care. One
example is the resource utilization groups (RUGs) which is a classification system for nursing home residents
commonly based upon functional assessment coupled with projected resource utilization. Other resource based
payment systems include home health resource groups (HHRGs) which are prospective payment systems
(PPSs) for home healthcare. However the most recent and perhaps most controversial cost containment effort
has been the introduction of managed care.
In economic terms managed care is an attempt to make medical care delivery more efficient through efforts to
both the reduce cost of providing healthcare services and improve the overall quality of care. Managed care
attempts to eliminate the inefficiencies characterizing the system by favorably affecting the price of the services
the site at which services are received and the utilization of services.
Two sources of inefficiency managed care tries to address are economic.
Moral hazard: As we have seen people change their behavior when they have insurance and may demand
services that are of little if any benefit except to ease their minds.
Demand inducement: Because patients usually trust their physicians and do not question their recommendations
physicians may abuse their role as the patients agent for their own financial gain by making treatment
recommendations that are not in the best interest of the patient. In fact most (but not all) physicians are patient
centered and do not take advantage of the system. Nevertheless many physicians tend to overprescribe
diagnostic tests and visits in order to protect against malpractice actions.
Both moral hazard and demand inducement place us on a flat of the curve medical system that is the point
where more care is of no additional value (and in some instances harmful) but continues to add to the cost.
Managed care arose mainly out of the opportunity for competition that resulted from the excess capacity in the
system (the medical technology arms race) and the resulting high cost of services due to underutilization.
Business responded to this by looking to health insurers covering their employees to rein in health insurance
costs and subsequently bring the year to year increases in premiums under some control.
Managed care attempts to eliminate unnecessary and inappropriate care and have patients use less costly settings
and providers without reducing quality. To accomplish this managed care transformed passive health insurers
which reimbursed providers on a cost or cost plus basis into organizations seeking to control costs and affect
quality.
You previously learned that there was excess capacity in hospitals due to the effects of the utilization of hospital
services brought on by Medicares PPS. These reductions in service utilization were due in large part to a
reduction in hospital length of stay and shift to outpatient services including the development and expansion of
ambulatory surgery. Managed care organizations (MCOs) took advantage of excess provider capacity to bring
costs down by for example negotiating discounted care in exchange for having the provider be part of the
MCOs preferred network of providers. What does this mean
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The post Discuss the ethical issues or concerns about MCOs providing a lower quality of care compared to traditional feefor service appeared first on Wise Papers.
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