types of MCOs

What are three types of MCOs (managed care organizations)?
HMOs (health maintenance organizations)
PPOs (preferred provider organizations)
POSs (point-of-service plans)
What are HMOs?
1st type of MCO
Wellness care
Capitation
Provider network – gatekeeping
Typically no deductibles
Low copayments
What is a staff model?
providers are salaried
great degree of control over practice patterns (utilization management)
What is a group model?
contract with multispecialty group practice and hospitals
providers employed by practice (not HMO)
HMO pays capitated fee
High degree of control over practice patterns
What is a network model?
HMO contracts with multiple group practices
HMO pays capitated fee
Generally offers wider selection of physicians
Fewer utilization controls
What is a Independent Practice Association (IPA) Model?
IPA is a separate legal entity from the HMO
IPA contracts with providers and group practices
HMO contracts with the IPA
HMO generally pays capitated fees to IPA
IPA pay physicians through a separate mechanism (capitation, FFS, etc.)
Implications:
IPA shares risk with physicians
IPA monitors and manages utilization
IPA provides health services
HMO enrollees have more choice of providers
What are PPOs?
HMOs + out-of-network options
Enrollees can see out-of-network providers for higher copayments
PPOs reimburse providers via discounted FFS
Fewer restrictions on care provided
Generally no gatekeeping
Precertification for hospitalization and expensive outpatient procedures
What are POSs?
HMOs + PPOs
Expanded provider networks (in- and out-of-network) and tight utilization controls
Utilize capitation
No gatekeeping, but higher fees for out-of-network care
What are the implications of MCOs in reference to access?
Good access to primary care, prevention, and health promotion
Makes sense, huh?
Fewer health disparities compared to traditional FFS
Still too expensive for many small employers
What are the implications of MCOs in reference to quality?
In general: enrollees didn’t like it
Who was the provider protecting and treating – him/herself or the patient?
Denied care, etc.
Evidence shows that MCOs actually improve early detection and treatment and do not compromise care
What were the implications of MCOs in reference to costs?
there continues to be inflation in the economy
What is Fee for Service (FFS)
Services can be broken down into individual parts
Exams, blood analysis, etc.
Each service is billed and paid for separately
What was the risk of having fees set by providers?
Risk: incentive for provider-induced demand
Rarely used
Still used by some providers (dentists, optometrists)
What is packaged pricing?
Bundled charges
Related services are grouped together
One bill for the package of services
For example, obstetrics services
What is Resource-Based Relative Values Scale (RBRVS)?
Services reimbursed based on “relative value”
Time, skill, and intensity of service
Complex formula
Medicare developed in 1989
Publishes Fee Schedule every year (geographic area adjusted)
What is Reimbursement under Managed Care?
PPOs: discounted FFS negotiated with network provider
HMOs:
Pay providers salary
Capitation – provider is paid a monthly rate per enrollee, regardless of whether the enrollee needs care or not
Removes incentives for provider induced demand
What is a retrospective reimbursement?
Traditional way of reimbursing health care services
Reimbursement rates were set after evaluating the costs
Directly related to length of stay, services provided, cost of providing the services
No incentive to control costs
Generally not used any more
What is a prospective reimbursement?
Traditional way of reimbursing health care services
Reimbursement rates were set after evaluating the costs
Directly related to length of stay, services provided, cost of providing the services
No incentive to control costs
Generally not used any more
What were the fees for service payments?
Visit any provider/hospital you want whenever you want (no referrals)
Usually responsible for premiums, deductibles and coinsurance (80/20)
-you may be required to pay for care yourself and be reimbursed by the plan
High moral hazard not only for patient but for doctors
What did managed care do?
-“mechanism for providing health services in which a single organization takes on the management if financing, delivery, and payment”
-Think of it like a toolkit
-really its a set of principles or ways of providing care
Employer-MCO relationship —-enrollees agree to visit MCO contracted providers
MCO – provider relationship —-negotiated reimbursement -utilization controls (you don’t get more or less than you need )
Utilization Management
Remember: when you use care, you spend the money that you’ve paid the insurance through premiums
-those claims are called losses because the company is losing money on you
-one way to reduce cost is to control what you can and cannot receive for services
MANAGED CARE
THE DELIVERY OF HEALTH CARE WITH THE FINANCING OF THAT CARE. YOU PAY A MONTHLY FEE TO RECEIVE YOUR HEALTH CARE FROM A GROUP OF PHYSICIANS, HOSPITALS, AND OTHER SERVICE PROVIDERS SELECTED BY THE PLAN.
HEALTH MAINTENANCE ORGANIZATION (HMO)
THE MOST RESTRICTIVE AND PROVIDE FEWER CHOICES OF PROVIDERS TO CONSUMERS. ONE STOP CARE. MUST CHOOSE PRIMARY PHYSICIAN
INDIVIDUAL PRACTICE ASSOCIATONS (IPA)
LESS RESTRICTIVE FORM OF HMO THAN THE GROUP OR STAFF MODEL. MOST HMO MEMBERS HAVE THIS PLAN. PROVIDE PATIENT WITH A LIST OF PHYSICIANS TO CHOOSE FROM.
POINT OF SERVICE (POS)
PERMIT MEMBERS GREATER CHOICE AND FLEXIBILITY BY ALLOWING YOU THE OPTION OF GOING “OUT OF PLAN” TO USE NON-HMO PROVIDERS (MUST PAY MORE TO DO SO)
PREFERRED PROVIDER ORGANIZATION (PPO)
NETWORKS OF DOCTORS AND HOSPITALS THAT HAVE AGREED TO GIVE THE SPONSORING ORGANIZATION DISCOUNTS ON THEIR USUAL RATES. GATEKEEPER. GREATEST FREEDOM, SO HIGHER PREMIUM.
PER MEMBER PER MONTH
IS A RELATIVE MEASURE, THE RATIO, BY WHICH MOST EXPENSE AND REVENUE, AND MANY UTILIZATION COMPARISONS ARE MADE.
QUALITY MANAGEMENT
INVOLVES ENSURING MEMBERS ARE GETTING ACCESSIBLE AND AVAILABLE CARE, DELIVERED WITHIN COMMUNITY STANDARDS; AND ENSURING A SYSTEM TO IDENTIFY AND CORRECT PROBLEMS, AND TO MONITOR ONGOING PERFORMANCE.
UTILIZATION MANAGEMENT
INVOLVES COORDINATING HOW MUCH OR HOW CARE IS GIVEN FOR EACH PATIENT, AS WELL AS THE LEVEL OF CARE. THE GOAL IS TO ENSURE CARE IS DELIVERED COST-EFFECTIVELY, AT THE RIGHT LEVEL, AND DOESN’T USE UNNECESSARY RESOURCES.
OUTCOMES MANAGEMENT
DETERMINES THE CLINICAL END-RESULTS ACCORDING TO DEFINED VARIOUS CATEGORIES AND THEN PROMOTE USE OF THOSE CATEGORIES WHICH YIELD IMPROVED OUTCOMES
DEMAND MANAGEMENT
A PROGRAM ADMINISTERED BY THE PROVIDER ORGANIZATION TO MONITOR AND PROCESS MANY TYPES OF INITIAL MEMBER REQUESTS FOR CLINICAL INFORMATION AND SERVICES.
DISEASE MANAGEMENT
APPROACH FOCUSES ON SPECIFIC DISEASES, LOOKING AT WHAT CREATES THE COSTS, WHAT TREATMENT PLAN WORKS, EDUCATING PATIENTS AND PROVIDERS, AND COORDINATING CARE AT ALL LEVELS. HOSPITAL, PHARMACY, PHYSICIAN, ETC.
LOCK-IN
A CONTRACTUAL PROVISION BY WHICH MEMBERS ARE REQUIRED TO RECEIVE ALL THEIR CARE FROM THE MANAGED CARE PLAN’S NETWORK OF HEALTH CARE PROVIDERS.
MEDICARE SUPPLEMENT INSURANCERIVATE HEALTH INSURANCE THAT PAYS CERTAIN COSTS NOT COVERED BY FEE-FOR-SERVICE MEDICARE, SUCH AS MEDICARE COINSURANCE AND DEDUCTIBLES.
PRIVATE HEALTH INSURANCE THAT PAYS CERTAIN COSTS NOT COVERED BY FEE-FOR-SERVICE MEDICARE, SUCH AS MEDICARE COINSURANCE AND DEDUCTIBLES.
POINT-OF-SERVICE (POS) OPTION
A MEMBER’S OPTION TO CHOOSE TO RECEIVE A SERVICE FROM OUTSIDE THE PLAN’S NETWORK OF PROVIDERS FOR AN ADDITIONAL FEE SET BY THE PLAN. GENERALLY, THE LEVEL OF COVERAGE IS REDUCED FOR SERVICES ASSOCIATED WITH THE USE OF NON-PARTICIPATING PROVIDERS.
PREFERRED PROVIDERS
PHYSICIANS, HOSPITALS, AND OTHER HEALTH CARE PROVIDERS WHO CONTRACT TO PROVIDE HEALTH SERVICES TO PERSONS COVERED BY A PARTICULAR HEALTH PLAN
Staff model
Closed panel HMO, buildings owned by HMO, preauth necessary for specialist referrals;EMPLOYS PHYSICIANS TO PROVIDE HEALTH CARE TO ITS MEMBERS. ALL PREMIUMS AND OTHER REVENUES ACCRUE TO THE MANAGED CARE ORGANIZATION, WHICH COMPENSATES PHYSICIANS BY SALARY.
Group model
Paid by capitation. Independent, multispeciality groups, usually share facility, staff, med records
IPA individual practice association
Outpatient networks, providers maintain own offices and identities. HMO and non-HMO patients are seen
Open panel plan
IPA individual practice association
Network model
Multiple provider arrangements. Healthcare provider paid like fee for service, group practices might have capitation payment
Point of service
Hybrid. Patients use HMO provider or go outside the plan. PCP is required.
Open-ended HMO
Point of service, hybrid
Capitation
Method of payment for health services in which an individual or institutional provider is paid a fixed, per capita amount for each person enrolled without regard to the actual number of nature of services provided or number of person served.
Carve-out
Contracts that separate out services or populations of patients or clients to decrease risk and costs.
Case management
Coordination of individual’s care over time and across multiple sites and providers, especially in complex and high-cost cases. Goals include continuity of care, cost-effectiveness, quality, and appropriate utilization
Closed panel
Type of health maintenance organization that provides hospitalization and physician’s services through its own staff and facilities.
Enrollee
Covered member or covered member’s dependent of a health maintenance organization (HMO)
Exclusive provider organization (EPO)
Hybrid managed care organization that is sponsored by self-insured (self-funded) employers or associations and exhibits characteristics of both health maintenance organizations and preferred provider organizations.
Group practice model
Type of health maintenance organization (HMO) in which the HMO contracts with a medical group and reimburses the group on a fee-for-service or capitation basis
Group practice (clinic) without walls (PWW, CWW)
Type of integrated delivery system in which the individual physicians share administrative systems but maintain their separate practices and offices distributed over a geographic area.
Health maintenance organization (HMO)
Entity that combines the provision of healthcare services. Characterized by (1) organized healthcare delivery system to a geographic area; (2) set of basic and supplemental health maintenance and treatment services; (3) voluntarily enrolled members; and (4) predetermined fixed, periodic prepayments for members coverage. Prepayments are fixed without regard to actual costs of healthcare services provided to members
Independent practice association (IPA)
Type of health maintenance organization (HMO) in which participating physicians maintain their private practices, and the HMO contracts with the independent practice association. The HMO reimburses the IPA on a capitated basis; the IPA may reimburse the physicians on a fee-for-service or a capitated basis
Integrated delivery system
Generic term for the separate legal entity that healthcare providers form to offer a comprehensive set of healthcare services to a population. Other terms are health delivery network, horizontally integrated system, integrated services network (ISN), and vertically integrated system
Integrated provider organization
Corporate, managerial entity that includes one or more hospitals, a large physician group practice, other healthcare organizations, or various configurations of these businesses.
Managed care
Payment method in which the third party payer has implemented some provisions to control the costs of healthcare while maintaining quality care. Systematic merger of clinical, financial, and administrative processes to manage access, cost, and quality of healthcare
Managed care organization (MCO)
Entity that integrates the financing and delivery of specified healthcare services. Characterized by (1) arrangements with specific providers to deliver a comprehensive set of healthcare services, (2) criteria for selecting providers, (3) quality assessment and utilization review, and (4) incentives for members to use plan providers.
Management service organization (MSO)
Specialized entity that provides management services and administrative and information systems to one or more physician group practices or small hospitals. An MSO may be owned by a hospital, physician group, physician-hospital organization, integrated delivery system, or investors
Medicare Advantage (MA)
Optional managed care plan for Medicare Beneficiaries who are entitled to Part A, are enrolled in Part B, and live in an area with a plan. Types of plans available include health maintenance organization, point-of-service plan, preferred provider organization, and provider-sponsored organization
Network
Physicians, hospitals, and other providers who provide healthcare services to members of a manged care organization. Providers may be associated through formal or informal contracts and agreements
Network model
Type of health maintenance organization (HMO) in which the HMO contacts with two or more medical groups and reimburses the groups on a fee-for-service or capitation basis
Out-of-pocket
Payment made by the policyholder or member
Per member per month (PMPM)
Amount of money paid monthly for each individual enrolled in a capitation-based health insurance plan
Pharmacy (prescription) benefit manager (PBM)
A specialty benefit management organization that provides comprehensive pharmacy (prescription) services; PBMs administer healthcare insurance companies’ prescription drug benefits for healthcare insurance companies or for self-insured employers
Physician-hospital organization
Hybrid type of integrated delivery system that is a legal entity formed by a hospital and a group of physicians
Point-of-service (POS) healthcare insurance plan
Plan in which the determination of the type of care, provider, or healthcare service is made at the time (point) that the service is needed
Preadmission certification
Process of obtaining approval from a healthcare insurance company before receiving healthcare services
Preadmission review
Process of obtaining approval from a healthcare insurance company before receiving healthcare services
Preauthorization
Process of obtaining approval from a healthcare insurance company before receiving healthcare services
Preauthorization (pre-certification) number
Control number issued when a healthcare service is approved
Pre-certification
Process of obtaining approval from a healthcare insurance company before receiving healthcare services
Preferred provider organization (PPO)
Entity that contracts with employers and insurers to render, a through a network of providers, healthcare services to a group of members. Members can choose to use the healthcare services of any physician, hospital, or other healthcare provider. Members who choose to use the services of in-network (in-plan) providers have lower out-of-pocket expenses than members who choose to use the services of out-of-network (out-of-plan) providers
Prescription management
Cost-control measure that expands the use of a formulary to include patient education; electronic screening, alert, and decision-support tools; expert and referent systems; criteria for drug utilization; point-of-service order entry; electronic prescription transmission; and patient-specific medication profiles.
Prior approval (authorization)
Process of obtaining approval from a healthcare insurance company before receiving healthcare services
Provider-sponsored organization (PSO)
Type of point-of-service plan in which the physicians that practice in a regional or community hospital organize the plan
Second opinion
Cost containment measure to prevent unnecessary tests, treatments, medical devices, or surgical procedures
Special needs plan (SNP)
Form of Medicare Advantage (MA) plan for persons dually eligible for both Medicare and Medicaid, for institutionalized persons, or for persons with severe chronic or disabling conditions.
Staff model
Type of health maintenance organization (HMO) that provides hospitalization and physicians services through its own staff and facilities
Subcapitation
Portion of capitated rate that is based to specialists for carved-out services
Third opinion
Cost containment measure to prevent unnecessary tests, treatments, medical devices, or surgical procedures
Withhold
Portion of providers capitated payments with managed care organizations deduct and hold to create an incentive for efficient or reduced use of healthcare services
Withhold pool
Aggregate amount withheld from all providers capitation payment as an amount to cover expenditures in excess of targets
Characteristics of Managed Care
Selection criteria for providers
Delivery of continuum of care to population including health and wellness management
Care management tools
Coordination of care by primary care provider
Evidence-based clinical practice guidelines
Disease management
Characteristics of Managed Care
Quality assessment and improvement
Performance improvement activities
NCQA
URAC
CAHPS®
HEDIS®
Member Satisfaction
Characteristics of Managed Care
Service management tools
Medical necessity review
Utilization management
Case management
Prescription management
Episode-of-care reimbursement
Capitated reimbursement
Global payment
Financial incentives
NCQANational Committee for Quality Assurance; dedicated to assessing and reporting on the quality of managed care plan
This is a private non-for-profit organization that assesses the quality of managed care plans in the U.S. and releases the data to the public.
HEDISHealth Plan Employer Data and Information Set–Contains managed care report cards, the national standards and performance reports on MCO
Health plan Employer Data & Info Set; a tool compare the quality of care patients receive under plans; 71 measures across 8 domains of care; NCQA collects the data directly from HMO and PPO in XML format consists of secondary records and doesn’t contain PHI; researchers allowed to use it for trends.
Describe the types of MCOs and pros and cons of each one.
Staff Model HMOs
1. Staff Model HMOs
employ health care providers directly. The providers are employees of the HMO and exclusively treat HMO members.
2. Group Model HMOs
contract with one or more group practices to provide health care services, and each group primarily treats HMO members.
3 Network Model HMOs
contract with one or more group practices to provide health care services, and some or all of the groups provide care to a substantial number of patients who are not HMO members.
4. Independent Practice Association (IPA) HMOs
Independent Practice Association (IPA) HMOs contract with individual physicians or with associations of physicians that, in turn, contract with their member physicians to provide health care services. Most physicians in IPA model HMOs are in solo practice and typically have a significant number of patients who are not HMO members.