Current and future legislation effects on managed care

¶ … Future Legislation: The Impact on the Future of Managed Care

The focus of the research proposed in this study is to ascertain what the advantages and disadvantages exist relating to managed care and to attempt to understand the impact that the current trends and future legislation in health care will have on the future of managed care in the health care system of the United States. Unless future legislation addresses the disadvantages and drawbacks that exist in relation to the managed care of the health care system will suffer greatly not only in relation to the quality of services and care provided to patients but will as well suffer from the inability to properly train and educate medical service providers. It is likely that the impact of future health care reforms and legislation will result in changing the face of managed care so dramatically that it will fail to exist in its present form. Questions in this proposal for research include those of: (1) What impact has managed care had on the training and education of health care service providers? (2) What does future legislation relating to health care system financing need to address to optimize services patients receive from health care providers and to optimize the training and educational potential of health care service providers? And (3) What effect will the proposed health care reforms have on managed care and will managed care exist in its present form following these health care reforms?

CURRENT TRENDS & FUTURE LEGISLATION: THE IMPACT on the FUTURE of MANAGED CARE

INTRODUCTION

The focus of the research proposed in this study is to ascertain what the advantages and disadvantages exist relating to managed care and to attempt to understand the impact that the current trends and future legislation in health care will have on the future of managed care in the health care system of the United States.

STATEMENT of THESIS

Unless future legislation addresses the disadvantages and drawbacks that exist in relation to the managed care of the health care system will suffer greatly not only in relation to the quality of services and care provided to patients but will as well suffer from the inability to properly train and educate medical service providers.

RESEARCH QUESTIONS

The questions addressed in the research proposed herein are those as follows:

What impact has managed care had on the training and education of health care service providers?

What does future legislation relating to health care system financing need to address to optimize services patients receive from health care providers and to optimize the training and educational potential of health care service providers?

What effect will the proposed health care reforms have on managed care and will managed care exist in its present form following these health care reforms?

BACKGROUND to the STUDY

The work of Gottlieb and Einhorn entitled: "Current Concepts Review - Managed Care: Form, Function and Evolution" states that the concept of the "HMO has its origins in the National policy of the 1970s. (1997) it is reported that complaints were stated related to "insufficient access to medical care and concern that the United States was inferior and inefficiently administered. In 1970, in response to calls for national health insurance from Democrats and some Republicans as well as to sharply rising health-care costs, the Nixon administration began to explore ways to achieve more efficient, less costly medical care and thus to quiet critics." (Gottlieb and Einhorn, 1997)

There was alarm by the administration at that time since the proposals for nationalized health care was a popular issue so the Nixon administration searched for a strategy that might compete on a political level with this plan and resulting was an alternative national health plan that had the HMO centric in the approach. This plan was initially termed the 'Health Maintenance Strategy" which would enable those receiving Medicare to make a choice between traditional fee-for-service systems and the HMOs. It was anticipated by those designing this plan that the actions of the government would serve to "catalyze similar restructuring in the private, largely employer-financed segment of the health-care economy, which, at the time, was also having difficulty coping with medical inflation." (Gottlieb and Einhorn, 1997)

Resulting was the Health Maintenance Organization Act of 1973 authorizing the federal government to loan funds to new HMOs who were unable to obtain private funding. Qualifications that were required were the offering of some specialty services as well as "open enrollment, community ratings..." As well as other features. This act however, did not pass the Congress which was controlled by Democrats at that time but some parts of it were incorporated into later legislation. It is stated that the Nixon legislation served to usher in an "...era during which the government took an active role in helping the HMO industry to grow. For more than a decade, until President Reagan phased out programs geared toward subsidizing HMOs, the managed-care industry enjoyed explicit support from the federal government in the form of grants and start-up money. From 1974 to 1980, the federal government contributed $190 million to the development of new HMOs." (Gottlieb and Einhorn, 1997)

Business leaders had become dissatisfied with the insurance industry by the middle of the 1970s and held that they "...were paying commercial insurers large fees to do little more than process hospital and physician claims for their covered employees. As a result, businesses began to self-insure. Gradually, most large and medium-sized employers cut back or entirely discontinued their reliance on commercial insurers. Surprisingly, most for-profit carriers failed to protect their profitable niche in the expanding health-insurance market." (Gottlieb and Einhorn, 1997) the HMKs had gained in their marketing influence by the early 1980s and sought a "greater role in the vast health-care market." (Gottlieb and Einhorn, 1997) by the beginning of the 1980s there are stated to have been three major health-insurance arrangements which are stated to be the following:

1). Approximately 90 per cent of working Americans and their dependents were covered by conventional indemnity health-insurance plans, purchased by employers as a benefit. Under a typical employment-linked plan, consumers were free to choose any available provider. Physicians were faced with few constraints and practiced more or less as they wished. The insurance company usually served as a passive intermediary between the employer and the provider. With little scrutiny, insurers typically paid bills submitted to them on a fee-for-service, retrospective basis. For the most part, insurers let providers determine the rates of reimbursement. The government-sponsored insurance programs (Medicare and Medicaid) were not much different. Although slightly less flexible, they were patterned directly on this traditional employee-health-benefit model. Moreover, private-sector insurance companies performed most of the day-to-day management of the Medicare program, further blurring any distinctions";

2) the second major type of health-insurance plan, the prepaid HMO, was the preferred arrangement for only about 5 per cent of Americans in 1980. However, the industry was still in its early stages. Approximately 80 per cent of HMO enrollees received care from so-called closed-staff or group-model HMOs, where physicians practiced in large, organized, multispecialty group settings; and 3) the remainder were enrolled in open-panel independent-practice associations, consisting mainly of physicians practicing in small groups or alone who wanted to compete with the larger, closed-panel plans." (Gottlieb and Einhorn, 1997)

According to Gottlieb and Einhorn there are four primary types of arrangements in managed care:

the staff-model HMO;

the group-model HMO;

the preferred-provider organization, or network model; and the independent-practice association. (1997)

Gottlieb and Einhorn describe each of these as follows:

Staff-model HMO: A staff-model HMO directly employs its doctors and health-care staff and usually owns its own hospitals and clinics. The HMO provides services at one clinic location or more through its own staff physicians. A well-known example of this type of model is the Kaiser-Permanente Plan;

Group-model HMO: A group-model HMO operates essentially as a partnership among a group of doctors, hospitals, and the membership plan. Under this arrangement, a single large multispecialty group practice is the sole (or major) source of care for an HMO's enrollees. The HMO provides services to enrollees by contracting with at least one physician-owned group practice or clinic. HMO members are seen in the medical group's office. Because of the similarity with the staff-model HMO, the term staff/group-model HMO is often used to denote these large HMOs;

Preferred-provider organization: To provide health-care services to enrollees, preferred-provider organizations contract with both large physician-medical group practices and independently practicing physicians. The preferred-provider organization enters into contracts with a broader range of health-care providers and is thought to offer enrollees more points of service (facilities and doctors from whom the enrollee is permitted to receive care and still be reimbursed by the managed-care plan), although often at the expense of higher premiums. There are variants of the preferred-provider organization, but enrollees typically receive all of their care for a flat monthly charge as long as they use the plan's so-called preferred hospital or doctors, or both. If enrollees seek care elsewhere, they typically pay at least part of the bill and, rarely, all of it; and Independent-practice association: An independent-practice association makes contractual agreements with independently practicing physicians, who provide services to members in their own offices. The independent physician groups and hospitals provide services under the organization's guidelines, but they may also care for patients who are not members. (1997)

While managed care does offer employers more control in choosing the specifics of the health care plan provision at the same time the insurance companies and the profit-drive health-care organizations possess a strong role. Opponents of the government having a primary role in health care financing state that managed care "raises the specter of rationing, lower quality, less freedom to choose physicians, interference with physicians' clinical autonomy, reduced access to specialty care and teaching hospitals, and increased government regulation." (Gottlieb and Einhorn, 1997) Further criticism has been stated in relation to the financial mechanisms employed by managed-care plans geared toward efficiency due to the risk of providers relating to penalties or rewards based on some measures of efficiency.

While health care providers are expected "to provide a wide range of services, recommend the best treatments, and improve the patient's quality of life. However, to keep costs down, they must limit the use of diagnostic services and specialty care, increase efficiency, and shorten the time spent with each patient." (Gottlieb and Einhorn, 1997) According to the American Medical Association there are ethical implications relating to the managed care financial arrangements. Also stated to be fundamental issues in this debate is the fact that "...academic medical centers do not fit naturally within managed-care systems because their missions are so different from those of largely service-oriented managed-care institutions." (Gottlieb and Einhorn, 1997) in fact, the expenses associated with maintaining research and education quality has resulted in many academic medical centers selling the hospital segment of their business.

LITERATURE REVIEW

The David and Lucille Packard Foundation journal 'The Future of Children' Vol. 8, No. 2 states that managed care has "...revolutionized the health care system in America." (1998) Managed care is described as a "vast array of financing and health care delivery practices that are designed to limit costs and ration care." (David and Lucille Packard Foundation, 1998) it is additionally related that healthcare providers and insurers have "created cost0conscious health insurance plans and employers and individuals are subscribing to them at unprecedented rates." (Ibid, 1998) Characteristics common to managed health care plans are inclusive of those as follows:

1) Strong financial incentives for members to obtain health care from only selected providers and hospitals that follow the rules established by the plan.

2) Reliance on gatekeepers, preauthorization, and other techniques to control access to specialty care, diagnostic tests, and hospitalization.

3) Shared financial risk among doctors, the health plan, and other health care professionals through the use of capitated payment methods or bonuses and penalties. (David and Lucille Packard Foundation, 1998)

According to this study reported in 1998, managed care has the potential of improving "delivery, quality and financing of health care services..." (Ibid) Additionally provider networks have served to improve both access to and coordination of care and in addition "the use of financial incentives to providers and members may promote preventive health care." (Ibid, 1998) the information systems which are very sophisticated have the potential to bring about improvement to accountability to customers through costs and services being monitored as well as the health of the managed care system members. Managed care has served to:

1) Reduce overall health care costs;

2) Stimulate the growth of for-profit health care;

3) Stimulate the growth of 'for-profit' health care;

4) Improve the access to preventive health and specifically for children who are privately insured;

5) Decrease access to preventive health care for children enrolled in Medicaid; and 6) Reduce access to specialty care for all insured children with an illness that is 'chronic or disabling'. (Ibid, 1998) critical feature of the revolutionary managed care system is the opportunity that presents in the creation of a managed care system that 'works for children'. The features of such a system are stated as follows:

1) a "medical home" that provides accessible, continuous, comprehensive, family-centered, coordinated, and compassionate care for all children.

2) a defined benefit package that is crafted around children's changing physical and emotional needs.

3) Access to appropriate pediatric specialists for children with chronic or disabling illnesses.

4) Coordinated care both within the managed care network and among other child-serving organizations outside the plan.

5) Rewards and encouragement for the active participation of parents.

6) Fair reimbursement rates, particularly for children with special health needs; and 7) Rewards to plans that improve the health of the children they serve. (Ibid, 1998)

The work of Seymour H. Levitt (2000) entitled: "Impact of Managed Care on Scholarly Activity and Patient Care: Case Study of 12 Academic Radiology and Radiation Oncology Departments" published in the Journal of Radiology reports a study in which "Six departments of radiology and six departments of radiation oncology from areas with low, medium, or high managed care penetration were asked to complete a questionnaire designed to address the impact of managed care on research and scholarly activity. Information, when available, was taken from fiscal years 1993 and 1998." According to Levitt site visits were made to the 12 departments which were then followed up with questionnaires. Findings of the study show that the departments that had "medium to high managed care penetration" had reported a higher level of dissatisfaction "in their ability to remain active in their education and research goals." (2000)

The results of this study indicate "...that for the period surveyed, the departments needed to increase clinical time to make up for decreasing patient care revenues. In turn, this has reduced the time and money devoted to scholarly activities. Information from this study will be used to develop a trends database for all U.S. radiology and radiation oncology departments. This, together with a more comprehensive study by the RSNA, will assist in measuring the current and potential long-term impact of managed care and other system changes on the practice of radiology and radiation oncology." (Levitt, 2000)

Levitt states that in the current focus held in health care on the marketing and economics of health care that the discussion surrounding health care is quickly becoming "one solely of dollars, policy, budgets and marketing strategies." (2000) This puts the primary purpose and mission of medical care, which is providing care to ill people at risk and diminishes this central purpose. According to Levitt (2000), health care professionals are "being challenged to clearly and strongly define" precisely who they are and what they do in order to "prevent this erosion of the central purpose" of the mission of those in the health care profession as they go about shaping the profession's future in the health care environment characterized by "rapid changes." (Levitt, 2000)

The health care professional's primary responsibility is to its patients and in order to make provision of the "best technology and clinical experience" to patients it is necessary that the health care professional of today "support and participate in scholarly activities" that serve to best inform the health care profession of the best methods of caring for their patients. The following figure is stated by Levitt to illustrate the relation of quality patient care to organizations that sponsor educational and research activities.

Relation of Quality Care to Organizations that Sponsor Educational and Research Activities

Source: Levitt (2000)

Levitt reports that centers of education and research and academic health centers are "under threat from the combined dominance of managed care and legislation results from the 1997 Balanced Budget Act. The revenue that is received from patient care that has been provided at academic health centers and that has been derived from research has been historically utilized in supporting academic health center activities which includes education in basic and clinical science and this revenue is stated by Levitt (2000) to contribute "up to 90% of the budget" however, "with the current focus on cost and budgets, serious problems are occurring within these institutions that are regulating research and education to secondary status..." This has resulted in health care that is high quality in nature being threatened.

In the absence of a strong focus on research and development towards testing new technology and pharmaceutical benefits and risks future health care quality is at risk. Undermining the current and future skill and problem-solving abilities of physicians is the lack of a strong commitment to education. Because previous studies which have cited the adverse effect of managed care on scholarly pursuits have been for the most part merely "anecdotal" the RSNA developed a "two phase project to systematically and scientifically examine the impact of managed care on the scholarly activities of departments of radiology and radiation oncology in the United States." (Levitt, 2000)

Levitt states that the goals of the questionnaires in this study were to "...establish a trends database for all radiology and radiation oncology academic departments nationwide. The database will help departments measure the ongoing impact of managed care and other health care system changes on research and scholarly activity." (Levitt, 2000) Findings of the study state that the majority of the departments, "regardless of managed care penetration recognized the extent of managed care penetration in their market areas. In most cases, managed care was defined as reduced-fee health care. All departments indicated that the growth of managed care firms had influenced their departments, and that Medicare rules and regulations were exacerbating that influence." (Levitt, 2000)