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Managed Care Organization
Definition/Introduction
Managed care organizations are integrated entities in the healthcare system that endeavor to reduce healthcare expenditures.[1] Since the 1970s, managed care organizations have shaped healthcare delivery in the United States through preventative medicine strategies, financial provisioning, and treatment guidelines.[2]
Issues of Concern
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Issues of Concern
The Health Maintenance Organization Act of 1973, an amendment of the Public Health Service Act of 1944, established the foundation for managed care organizations and their comprehensive cost-saving methods.[3] Managed care organizations are essential for providers to understand, as their policies can dictate many aspects of healthcare delivery. Provider networks, medication formularies, utilization management, and financial incentives influence how and where a patient receives medical care.[4]
Managed care organizations take many forms, most commonly as health maintenance organizations (HMOs), preferred provider organizations (PPOs), and point-of-service (POS) organizations. Differentiation among the aforementioned structures can be difficult and may require further investigation for providers and patients to fully understand. The notable points of each are as follows:
- Health Maintenance Organizations (HMOs): A patient chooses an in-network primary care provider responsible for referrals to specialists. The insurance typically covers only in-network providers and is generally the least expensive option.
- Preferred Provider Organizations (PPOs): Patients can choose from a list of in-network providers for primary and specialty care. Patients can also see out-of-network providers, but incur higher costs than those of in-network providers. Additionally, patients can typically see in-network specialty providers without a referral. Prices tend to be higher due to increased flexibility.
- Point of Service (POS) Organizations: Point-of-service (POS) organizations are a hybrid between HMOs and PPOs, requiring a PCP but allowing patients to see in-network specialists without referrals. The cost is typically between HMOs and PPOs.
- Exclusive Provider Organizations (EPOs): EPOs allow patients to choose in-network providers without establishing a primary care provider or obtaining referrals. However, all out-of-network expenses are not covered.
Insurance coverage allows out-of-network emergency medical care to be provided, as patients cannot reasonably choose providers in an emergency setting. Financial coverage for medically necessary emergency visits may depend on admission status, network status, and treatments administered.
Clinical Significance
Managed care organizations influence healthcare in all aspects of delivery. Managed care organizations have shown to improve outcomes, which has contributed to their expansion.[5][6][7][8] Provider networks influence the choice of primary care providers and may limit the ability to see specialty providers, depending on the plan’s requirements. Organizational-imposed regulations also affect preventive care measures and preferred treatment methods, including medication formularies, which, by design, reduce overall expenditure.[1][9] Together, these regulations aim to reduce healthcare expenditures by providing cost-effective management.[10] This cost-effective management approach can be implemented as a long-term patient care plan or within the context of public health.[11][12]
Provider reimbursement also significantly affects healthcare utilization.[13] As managed care organizations provide financial incentives for worthwhile ventures, providers are more likely to align with each program's intended goals. Furthermore, cost-sharing measures, such as capitation, impose a financial stake on providers in healthcare cost utilization, potentially influencing treatment plans.
Nursing, Allied Health, and Interprofessional Team Interventions
Interprofessional teams need to understand the premise of managed care organizations and how they affect healthcare delivery.[14] As a business, providers must balance expenditures, prudent treatment, and reimbursements to continue providing healthcare at a reasonable cost. Furthermore, interdisciplinary teams should understand how their treatment plans may be altered by managed care organizations and the effects of such alterations on outcomes.[15] By understanding the impact of managed care organizations, interdisciplinary teams can assist providers in delivering prudent, cost-effective care.
References
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