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Managed Health Care

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Prior to Managed Health care organization fee for service was the standard payment system. Managed care organization use a variety of alternative payment system. Explain when, where and with whom do they use them. Compare and contrast them to the FFS payment system outcome. Also, explain the impact they can have on the patients, employers, the primary care MD, the specialist and hospitals. What impact has this change had in level of patient care and costs?

People in the United States felt that health insurance was unnecessary prior to the 1920's. Medical technology back then was in the earliest stage of development, and most people had very low medical expenditure. Since there was a very low demand for health insurance, commercial insurance companies were unwilling to offer private health insurance policies. This also defeated the proposal for compulsory nationalized health insurance. Physicians were also in opposition because they feared that government intervention would limit their fees. As everything started to progress, several changes occurred and medicine started to play an increasing role in people's lives, where treatment shifted from homes to hospitals.

Demand for medical care increased and cost of medical care rose. As demand for hospital care increased, new payment innovation developed that gave birth to the market for health insurance plan. In 1929, Blue cross Blue shield was founded. This fee for service health insurance plan provided subscribers with free choice of physicians and hospitals. This plan offers more flexibility in exchange for higher premiums, higher out of pocket expenses, and more paper work. In this plan, you can choose any doctor and hospital you want, and you may visit any specialist without getting permission from a primary care physician. You have to pay a deductible before the insurance company pay for the claim, and the doctors are reimbursed about 80 percent of the amount from the bill, while you pay the remaining 20 percent. In some cases, you may have to pay upfront and then submit the bill for reimbursement. You may also have to pay the difference if you doctor charges more than average on the bill. With fees to service insurance, doctors and hospitals get paid for each and every service, like doctors office visit, tests, procedures, lab work and all the other health care services. Though fees for service plans allows you to choose any hospital or doctor you want, they are usually the most expensive plans.

There are few different kinds of managed care organization plans, but they all have at least some common characteristics among them. All the managed care organizations are concerned with financing of medical care and cost effectiveness by saving money. Today, the rising cost of everything in health care from procedure to diagnostic treatment had led us to managed care health care system. There are a good number of alternative health insurance options available, HMO, PPO, POS and Fees for Service plan.

Different plans have different choice and restrictions. HMO and Fee for Service plans are on opposite sides of the health insurance range, while POS and FFS plan fall somewhere in between, and PPO and FFS plan are almost similar. HMO is the least flexible, followed in order by the POS, the PPO and Fee for Service plans. Looking at the cost, HMO is usually the least expensive option, which is followed by POS plan, PPO plans and finally the Fee for Service plan.

Preferred Provider Organization (PPO) plan is a combination of Fees for Service plan and managed care plan. In this plan, the policy holder has to pay a reasonable co-payment, the patient choose any specialist with out a referral from a primary care physician. The advantages are that if you go to a doctor in the network, you only have to pay the co-payment and coinsurance based on lower charges for being in network. The disadvantages are that if you see a doctor who does not belong to the PPO network, you may end up paying part of your bill, pay a deductible, and you may also have to pay the difference between what the network doctor charges verses out of network doctor charge, just like in the Fees for Service plan. With this plan, the patient has much more freedom when choosing a provider. With this plan, the primary care doctors may be left out in most cases by the patients because they don't need a referral to go to a specialist. While on the other hand, specialists have an advantage because their patients don't have a gatekeeper to refer them. A disadvantage for going to an out of network physicians is that PPO plan requires more paper work by physicians and the patient in order to process claims.

Health Maintenance Organization (HMO) plan requires you to pay a set co-payment and you don't generally have to pay a deductible. Your primary care physician serves as a gatekeeper managing all of your health care. You can only go to a list of specialist doctors provided to you, and only with a referral from the PCP. The disadvantage for a patient is that sometimes they have to wait a long time to get an appointment with a specialist within the network. This type of plan is good for a primary care physician because they are the gatekeepers for all the patients. The specialists have to have a good relationship with the primary



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