Difference Between Fe-For-Service Plan And Managed Care Plan

Managed care dominates health care in the United States. It is any health care delivery system that combines the functions of health insurance and the actual delivery of care, where costs and utilization of services are controlled by methods such as gatekeeping, case management, and utilization review. Different types of managed care plans came into development by three major factors. These factors include choice of providers, different ways of arranging the delivery of services, and payment and risk sharing. Types of managed care organizations include Health Maintenance Organizations (HMOs) which consist of five common models that differ according to how the HMO is related to the participating physicians, Preferred Provider Organizations

The Iron triangle for healthcare consists of cost, quality, and access; these three characteristics when balanced create great healthcare. Managed Care Organizations combine the three to offer consumers with care that is appropriate for their individual needs. Our book describes managed care organizations as “the cost management of healthcare services by controlling who the consumer sees and how much the service cost” (Basics of the U.S Healthcare System, Niles). Taking a look at the history prior to the Health Maintenance Organization Act of 1973 (HMO ACT of 1973) the implementation has been significant in balancing cost, and quality control. Before this Act was signed in to law by President Nixon healthcare costs were determined by fee for service. A fee for service or indemnity plan is a plan that allows the provider to determine the cost of service, this fee for service plan caused for healthcare costs to increase rapidly. An example of this would be going to the doctor with neck pain, being told to stretch then receiving a bill for 25,000 dollars. As could be understood the cost of healthcare had became a problem.

of care and changes in the patient’s condition to revise the course of medical treatment if

There are some advantages and disadvantages of Fee for Service, and Capitation for patient access to services, patient health outcomes and overall health care costs ( Drossos, A, 2002). First, the advantage of capitation for patient access to services are obviously establishes relationship between the doctor and the patient, encourages doctors to

Managed care plan is another significant health care plan that gives options that may either make it easy or limit medical care services by the patients. This is the type that most people embrace. It covers a wide spectrum of health services in a cheaper and most convenient way. Costs are relatively lower when patients utilize the doctors and other stake holders. Mostly this cover does not require one to fill out any insurance forms or give out any claims to the company that has given you the cover when one uses the in-network providers. One pays a co pay each time he visits the doctor or any hospital. This co pay varies depending on who you visit and whether you receive brand name or generic prescription drug. Various managed care plans adopt a mail-order pharmacy alternative. In this alternative, one sends for the doctor’s prescription for

Health is an issue which needs be left to the physician while dollars and cents can remain with the financial officer. Managed care theoretically may seem appealing, but most view managed care practices as emphasizing cost control over quality.

Some of the pros for managed care are; Preventive care — HMOs pay for programs, they are set up and are intended at keeping one healthy (yearly checkups, gym memberships, etc.)The idea is, so they won 't have to pay for more costly services when and if one gets sick. Lower premiums — Because there are limits set as to which doctors one can see and when one can see them, HMOs charge a premium and usually they are lower premiums. Prescriptions — As part of their precautionary retreat, most prescriptions are covered by HMOs for a co-payment that also can be very low. Fewer unnecessary procedures —doctors are given financial incentives from HMOs , to provide only needed care, so doctors are less likely to

Another issue for fee-for-service system is that the providers set the prices for services. Patients were free to seek any type of healthcare services that they thought they required, while providers set the costs for each service that was billed to indemnity insurance companies (Shi & Singh, 2015). Insurance companies had little control on the types of services that the patient received and prices billed for each service. The fee-for-service model encourages excessive and unwarranted procedures and offers no incentives to utilize economical services (Smith, 2010). While the patients enjoy the freedom of being able to seek out their own services, over-utilization of expensive services on unnecessary and highly technical services increased healthcare costs.

Managed care has been adopted into the government funded care organizations. Medicare managed care plans provide all coverage themselves, including basic Medicare coverage. Managed care plans cover above and beyond the basic benefits of Medicare, the size of premiums and copayments, and the decisions about paying for treatment are controlled by the managed care plan. The basic premise of managed care is that the member/patient agrees to receive care from only a specific doctors and hospitals, in exchange for reduced healthcare costs. Medicare, like other insurance companies offer plans that give Medicare beneficiaries more choices in coverage, like HMO or PPO. Managed care has been used since the mid 1990’s in order to provide healthcare to beneficiaries with serious or life long illnesses. Today, managed care has become a way for states to provide quality care to both Medicaid and Medicare patients.

Fee for service indemnity plans are essentially health insurance plans in which the consumer may choose any provider or hospital that they want to use; however, these plans are typically more expensive than other plans (Mukherji & Fockler, 2014). The fee for service plans pay only for services rendered, typically using the CPT coding system (Reimbursement, 2016). The indemnity plans will require the provider to bill the insurance company for services rendered (Zuvekas & Cohen, 2016). Typically, the insurance company will pick up 80% of the patient’s bill and the patient is responsible for the other 20% (Zuvekas &

Hello Carlo, I do agree with every statement you have pointed out regarding the traditional and managed care insurance. Like you have mentioned, traditional insurance is for individuals who are willing to pay high deductibles and co-payments. Even though the freedom of choice is a big advantage for the consumers there is a downside to it as well. Yes, the patient has the freedom to choose a health care provider, doctor or a hospital according to their will. But, this type of insurance mainly focuses on treatment expenses rather than encouraging preventive treatment options and yearly physical check-ups. People more likely prefer to get involved in preventive care measures.

A local insurance agent explained to me the difference between a managed care and a health maintenance organization. Managed care will not pay all the costs of treatments that I would receive. The insurance agent stated that I should carefully

The United States being referred for specialties depends on the insurance plan (Mossialos, Wenzel, Osborn, Sarnak, 2016, pp. 171-177). Health Maintenance Organization (HMO) plans give access to certain healthcare organizations and physician within their network that have agreed to lower rates for their services. The individual must agree to these services to have services covered. All services will be coordinated by the primary care physician PCP. Medicaid coverage is also based on these principles. Preferred Provider Organization (PPO) plan have higher premiums but give more flexibility. PPO allows the individual to see any physician they choose but cost is less if the individual stays within the network. PPO does not require that the individual have a PCP. No referrals for specialist are needed.

This rewards quantity over quality. Fee for service does nothing to promote low cost, high value services, such as preventive care or patient education even if they could considerably enhance patients’ physical condition and reduce health care costs through the system. 78% of employer sponsored health insurance is was fee for service. Reimbursement is the form of payment for services provided. The most common practice is the insurance company pays to the provider directly. Under the MCO when receiving care the patient is usually required to pay a small amount out of pocket such as 15 or 20 dollars and the rest is picked up by the managed care plan.

At the end of your post you made it very clear which option is best for an individual; “There is risks with both of these reimbursement plans. If patient satisfaction and trust is your desired goal, then the fee-for service is the best option. To cut cost increase patient base, then the capitation option is better suited” which this statement is right on point. Capitation system requires a set amount of cost every time the patient seeks their healthcare provider. Whereas FFS it all depends upon what type of procedure you are getting done. Thank you Jerri for your knowledge in FFS and capitation method’s.