Van Parys (2017) explains that managed care has arisen out of the need by the U.S. public health insurance market, to shift towards reimbursement models that are based on the idea of transferring risks from the government, towards health insurers and healthcare providers. In essence, Medicaid and Medicare will outsource healthcare delivery to managed care plans where the plans carry the risk emanating from their enrollees (Van Parys, 2017).
How exactly are costs reduced?
Managed care plans involve specified physicians, hospitals, and health care providers who serve plan member patients at reduced rates and on contract. The plans have fewer premiums and often require less paperwork but have the downside of having a restriction on the choice of important aspects such as physicians, treatments, and drugs. Health Maintenance Organizations (HMO) as an example of a managed care plan, a client is required to select a physician (primary care) who is already a member of the plan. The physician is then tasked with the role of providing primary care and coordinating other advanced forms of treatment including referrals to other specialist doctors who are members of the plan.
Frank, Glazer, and McGuire (2017) explain that when managed care plans are made competitive, health care is forced into a position of making a tradeoff between costs and quality. de Bocanegra, Maguire, and Darney (2015) assessed the quality of care provided to women under managed care plans with respect to contraception and found out that quality of service increased when the HMO did a deliberate integration of reproductive needs into clinic visits and furthering the same to other healthcare factors beyond family planning. The key aspect is deliberate. To provide care without diminishing the quality, deliberate efforts must be employed otherwise managed care plans are likely to fail the quality question.
de Bocanegra, H. T., Maguire, F., & Darney, P. (2015). Family planning provision during primary care visits: a chart review of managed care plans in California. Contraception, 92(4), 408.
Frank, R. G., Glazer, J., & McGuire, T. G. (2017). Measuring adverse selection in managed health care. In Models of Health Plan Payment and Quality Reporting (pp. 29-57).
Van Parys, J. (2017). How do managed care plans reduce healthcare costs? Columbia University working paper. Retrieved from http://www.columbia.edu/jnv2106/jvanparys.jmp.pdf
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