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Health Science

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Dec 6, 2023

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Managed care has grown greatly since its inception, and as of 1990, it has been the dominant force that has changed the delivery of health care in the United States (Shi & Singh, 2023, p. 189). According to Shi & Singh (2023, p. 190), the main characteristics of managed care organizations (MCOs) are:  MCOs manage financing, insurance, delivery, and payment for providing health care.  Premiums are negotiated between MCOs and employers.  MCOs function like an insurance company and assume risk.  MCOs arrange to provide health care, mainly through contracts with providers.  MCOs manage the utilization of health care services.  The three main payment methods are capitation, discounted fees, and physicians on salary. In 1973, the Health Maintenance Organization Act was passed to help curtail the rising costs of health care in the United States (Shi & Singh, 2023, p. 191). “The reasoning behind promoting HMO growth was the perception that it would encourage competition among health plans, increase efficiency, and slow the rate of growth in health care expenditures” (Shi & Singh, 2023, p. 192). Manage Care’s growth was slow at the beginning of its inception. Managed care emerged as a widely embraced initiative to combat the escalating expenses associated with health care. Medicare and Medicaid utilize MCOs to manage some of their enrollees. For Medicare enrollees, they have a choice to either join an MCO or join the traditional Medicare fee-for-service program (Shi & Singh, 2023, p.193). In 2020, more than 40% of Medicare enrollees have chosen to use the Medicare MCOs, with UnitedHealth Group and Humana being the largest two MCOs (Shi & Singh, 2023, P.193). For Medicaid enrollees, there was originally a federal waiver under the

Social Security Act to allow states to utilize MCOs, and later, in 1997, the Balanced Budget Act gave the states the authority to use MCOs at their own will (Shi & Singh, 2023, p. 194). As of 2018, South Carolina and Washington states have their Medicaid enrollees all in MCOs, and several other states have 95% of their enrollees in MCOs (Shi & Singh, 2023, p.194). Managed care became the standard in health care, but not without problems. In the late 1990s, consumers, physicians, and politicians all expressed concerns with MCOs. Consumers wanted more provider choices since MCOs limited the providers available for consumers to use. Physicians, hospitals, and other health care providers were dissatisfied with the amount of control MCOs had over them and the lower reimbursement rates MCOs provided. Politicians heard the outcry of consumers and health care providers and started to regulate MCOs. These concerns caused transformation within the MCOs. Health Maintenance Organizations (HMOs) utilized blended reimbursement methods to help appease the medical providers (Shi & Singh, 2023, p. 194). Preferred Provider Organizations (PPOs) help to satisfy consumers by allowing less gatekeeping as long as consumers go to approved providers (Shi & Singh, 2023, p. 194). Shi & Singh (2023, p. 195), discuss the utilization control methods in managed care as follows:  Expert evaluation of which services are medically necessary in a given case. Such an evaluation ensures that only medically necessary services are actually provided.  Determination of how services can be provided most inexpensively while maintaining acceptable standards of quality.  Review of the process of care and changes in the patient’s condition to revise the course of medical treatment if necessary. “There are noticeable differences in patients’ ability to gain access to care depending on whether they are insured through private or public programs” (Shi and Singh, 2023, pp. 199-200). Having

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