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Managed Care Organzations. (MCO)
Since the increasing costs of health care insurance became a significant issue in the profitability of health care provider in the 1980's health care provider, insurance companies, doctors and hospitals have searched for creative ways to cut costs while not sacrificing care qualitative. What has evolved in the health care industry is a shopping list of various organizations which offer health care services. The different organizations all address the issues within the health care industry with slightly different priorities. As a result, as a company, we have to determine which priorities are important to our group, and to our employees. We need to evaluate the levels of care, costs management, universal availability and quality of care which we are willing to pay for. The result of this process will be that the health care organization which is most appropriate for our organization will be fairly self evident.
In the health services industry, a number of variables have been addressed by the health providers. The results is that each of these types of providers have unique trade offs, which may or may not be suitable for our organization. The following list of services provider types will attempt to explain the differences, and present the options for our organization. Beginning with the first of 6 organization types, each of the organizations provide increasing levels of quality control, increased costs, and possibly, increased quality of care for our employees, although the different organizations would never admit to such. In a competitive health care services market place, our company will receive the quality and cost controls in health care which we are ultimately willing to pay for. In the same way automobiles come in differing levels of quality, and associated costs, the different MCO's provide a similar trade off. As the board of directors, we must choose what is important to us and our employee's well-being as we make the decision of which health service provider to employ.
As the board moves through the decision making process, it is helpful to know and understand that these styles of health care delivery and service management programs no longer exist as completely separate and distinct organizations. The health care delivery providers have come to understand the benefits which they can receive in increased customer appreciation by allowing cross-over between plan types and service delivery. Thus, the resulting plan which our company selects may be a hybrid of the following group types.
Managed indemnity is the most similar to traditional insurance. The health care service management company participates only minimally in the management of the health care service providers. These style of organizations are intended to "provide managed care overlays which exert cost controls for insured plans while retaining the individuals freedom of choice of provider and coverage for out of plan services and expenses" (Kongstevdt, 2001)
In other words, this type of service will be most familiar to our aging employees who wish to maintain the connection to family doctors which have been a part of their health service delivery for decades. The managed care aspect of these plans provides oversight is directed toward specialty services, such as catastrophic care, mental health services, etc.
Preferred provider organizations are the result of arranged formal agreements between company's benefits departments and a group of health care service providers. This direct arrangement allows employers to purchase health benefits directly from a group of providers in much the same way that a co-operative works. The employer gets specific prices on services based on the member's ship organizations purchasing power, and the health care service provider group is guaranteed to stay in operation because of the membership groups.
PPO's establish their network by contracting directly between employers and service providers. The have a negotiated rate plans. Unlike the POS HMO's below, these plans often allow for members to use outside service providers of choice, who are in turn reimbursed at the group rate. The key to this approach is that the outside care provider becomes affiliated with the managed group care provider.
The Point of Sale HMO if a hybrid of the above PPO and the full HMO below. The POS HMO allows members to go outside of the HMO group on a regular basis in order to secure care from specialists, or doctors which are not necessarily affiliated with the HMO. Individual HMOs use this approach to care in order to encourage a growing market share. The HMO feature guarantees member's availability to the HMO for common and frequently used services, and still leaves the door open for members to obtain services from specialists in the event of specialized care.
Open Panel, or independent group HMO's
Open panel HMO has service contracts between a group of multispecialty physicians which service the MCO members as well as private practice patients. The open panel refers to the physicians which are a part of the group. The HMO physicians form a co-operative health care service provider's network, which may or may not have a centralized building and location. Most often physicians in this kind of arrangement have their own offices, and members and non-members have access to the care.
Closed Panel or captive group HMO's
Close panel HMO is a fully 'member only' care facility which provides all health care services from within the HMO. These organizations do not offer members the opportunity to seek care outside of the HMO. The HMO provides all administrative aspects of the health services delivery system including managing finances, collecting payments and policy fees. A closed group HMO is truly a closed system, providing all levels of care to members in house. (Information and descriptions adapted from Kongstevdt, 2001)
According to Roussel (1999) from 1995 to 1999 HMO enrollments have risen steadily from a total of almost 70 million in 1995 to over 100 million members in 1999. The cost savings of providing service through a co-operative network of doctors has become the most economical way of delivering health care services.
AS the company considers entering into a contract with a managed care provider, we will need to understand the positive and negative aspects of each organization, and how they will benefit our members. Of course, member benefits are defined widely, in much more comprehensive terms that just the medical care received. Each of these health care delivery systems delivers quality care for members. Each has as provider members, or allows access to professionals in all the fields of medicine. Members will have their medical needs met; however, they will also be affected by the access to care and by the price stability of care over the years. Therefore, our company needs to consider members benefits in the following domains.
How will our employees gain access to the plan? The first 3 on the list provide access to employees at many access points across the metroplex, while the HMO's have their own facilities. Understanding how our members will view the different aspects will be an important aspect of our decisions.
Are the employees of our organization in a wide age band, or do we have a particularly young, middle age, or older organization? The presence of pre-existing conditions and other circumstances which can become part of life in middle and old age can limit the choices we present to them. In the case of the HMO's, most have no pre-existing condition clauses, and if they do the clause's exclusion lasts for a short period. In the case of private service providers, pre-existing conditions can be completely excluded from coverage.
In the event of families, do our employees want to visit co-operative health care facilities with their young children, or would they rather be seen in private offices. This will be an important aspect of our choice of health care providers.
What can the company expect in the way of fee increased in the future? If economy of scale still applies to these groups, HMO's have been accepting members at a much higher rate than the other groups, and therefore the company can expect more price stability from these organizations. Additionally, since these organizations have closer review of services provided, we can expect that the level of care will be more consistent in HMO than the other care management providers.
How members have access to prescriptions is also an important aspect of consideration when discussing health care providers. HMO's have their own in house pharmacy while the first three provider networks typically do not because they do not work out of a common facility. When a HMO member gets a prescription from the member pharmacy, they have a great deal of freedom and ease because of the 'one stop approach. However members that use managed care services in traditional pharmacies often encounter a more extensive array of paperwork, and potential for difficulty, including full payment which is reimbursed by the network rather than low dollar figure co-pay.
Finally, because the HMO provides the higher level of care monitoring, we…[continue]
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