WHAT IS MANAGED HEALTH CARE?

by Christine Tobin, MBA, RN, CDE

For many of us, the growth of "managed health care" has been frustrating and confusing. We are angry and upset at a system in transition, which we do not yet fully understand. Some areas of the country are just beginning to feel the impact of managed care, while other regions are fully involved. These different stages in the evolution of managed care compound our lack of understanding.

Simply stated, managed care is a system that integrates the financing and delivery of appropriate health care using a comprehensive set of services. Managed care is any method of organizing health care providers to achieve the dual goals of controlling health care costs and managing quality of care.

In the United States, we have a private and competitive health insurance system which will cause managed care to continue to evolve. Competition and rising costs of health care have even led indemnity plans to incorporate elements of managed care, resulting in fewer "traditional" indemnity plans. There are several key elements common to all managed care arrangements:

* explicit standards for selecting providers;

* formal programs for ongoing quality improvement and utilization review;

* emphasis on keeping enrollees healthy to reduce use of services;

* financial incentives for enrollees to use providers and procedures associated with the plan.

Managed care is a system that integrates the financing and delivery of appropriate health care using a comprehensive set of services. Managed care is a broad term which encompasses many types of organizations and insurance options including:

* health maintenance organizations (HMOs), which provide a wide range of services for a fixed, periodic prepayment;

* preferred provider organizations (PPOs), consisting of groups of hospitals, physicians and other providers who contract with an insurer, employer, third-party administrator or other group to provide health care services to covered persons;

* point-of-service plans (POSs), which combine HMO and PPO features, Members can choose which option they want to use at the time of service;

* indemnity or fee-for-service plans which incorporate features of managed care and provide benefits in a predetermined amount for covered services;

* self-insurance plans, where employers and businesses assume fiscal liability and the responsibilities of an insurer for their own employees. These plans typically incorporate features of managed care. The employer may contract out administration of the plan.

Managed care organizations (MCOs) try to achieve their goals by controlling patient access to specialized care and eliminating unnecessary services; integrating health care delivery and payment systems through prepaid member fees; limiting provider fees by establishing fixed rates for physicians and hospital services; and controlling drug costs by implementing pharmacy benefits management plans.

Features common to managed care include:

* pre-authorization;

* rigorous utilization review;

* emphasis on use of primary physicians and other health care providers;

* quality improvement programs and payment systems that make physicians, hospitals and other providers financially accountable for cost and quality of medical services.

Educators have been struggling with the lack of reimbursement for diabetes education and medical nutrition therapy for years. I believe the evolution of managed care can greatly benefit both access to and coverage of diabetes education services. The health insurance industry views wellness and prevention as part of managed health care.

(Note: Reprinted from "AADE News," January 1997, Volume 23, Number I, published by the American Association of Diabetes Educators. Used with permission.)