Abstract
In this essay, I will analyze and contrast the impact of managed care on healthcare utilization and cost. I will look at how managed care has changed how it is delivered, how it has changed how health care is paid for, and the effect it has had on the availability of services. The paper will also discuss the impacts of managed care on utilization and cost, as well as recommendations. Managed care has had a significant impact on healthcare utilization and cost. The implementation of managed care has led to a decrease in the cost of healthcare services and an increase in the use of preventive services. However, managed care has also had some drawbacks, including reduced access to care and limited choice of providers and services. To improve the managed care system, I recommend increasing access to care, expanding the choice of providers, improving the quality of care, and increasing transparency. We will also discuss the pros and cons of managed care and consider its implications for the future of health care. On the positive side, it has successfully reduced healthcare costs and increased the efficiency of care delivery. On the negative side, it can limit the availability of certain services and reduce patient choice.
Keywords: managed care, plans, utilization, cost, healthcare, quality care.
Introduction
Managed care is a type of healthcare insurance that is an approach to healthcare delivery that emphasizes preventive care and cost containment while maintaining the quality of care. It attempts to control costs and utilization of services while ensuring quality and access to healthcare services. Managed care plans are often organized as a network of providers and facilities that work together to provide comprehensive coverage for members. The goal is to provide patients with quality care at an affordable cost, which has had a significant impact on healthcare utilization and cost. It has changed how health care is delivered, with providers and insurers working together to ensure that care is provided most efficiently and cost-effectively. The managed care system has also resulted in changes in how healthcare services are paid for and how providers are compensated. In addition, managed care has affected the types of services available to patients and the availability of those services.
History of Managed Care
The plan utilizes various management techniques, such as preauthorization, utilization review, cost containment, and risk management. The concept of managed care began in the 1970s when employers and health insurers began to look for ways to reduce the cost of healthcare (Conrad, 2005). The managed care model was developed in response to rising health care costs, which had been steadily increasing for decades. The managed care model was initially implemented through health maintenance organizations (HMOs). HMOs offered comprehensive health care services for a fixed fee and utilized various strategies to control costs, such as preauthorization of services, utilization review, and cost containment. As employers and health insurers realized the potential of managed care to reduce costs, the model began to spread rapidly. By the 1990s, managed care had become the dominant form of health insurance in the US. Alley et al. (2016) explain that some forms of managed health care plans today include Medicaid and Medicare, which have significantly addressed health issues and social needs in society.
Pros and Cons
Managed care has both advantages and disadvantages. On the positive side, it has successfully reduced healthcare costs and increased the efficiency of care delivery. By requiring preauthorization for specific services and limiting the number of providers and facilities members can access, the plan has reduced the cost of care for providers and patients. In addition, using provider networks has allowed for better care coordination, resulting in improved care outcomes and increased patient satisfaction (Artiga & Hinton, 2019). On the negative side, managed care can limit the availability of certain services and reduce patient choice. By limiting the number of providers and facilities members can access, managed care can minimize access to specialized or high-cost services. In addition, managed care plans often require preauthorization for certain services, which can lead to delays in care or denial of services that may be necessary. Finally, managed care plans often require patients to pay higher out-of-pocket costs for services not covered by their plan.
Impacts
Managed care has had a significant impact on health care utilization. In the US, the plan has been credited with reducing the overall cost of health care by controlling the utilization of services. It has effectively reduced the number of unnecessary services and procedures and the length of hospital stays. It has also effectively reduced the number of referrals to specialists and the number of tests ordered. Managed care has also been effective in controlling the utilization of pharmaceuticals. Using formularies has reduced pharmaceutical utilization, which lists approved medications covered by the health plan (Artiga & Hinton, 2019). Formularies allow providers to select the most cost-effective medications for their patients while ensuring they are safe and effective.
Managed care has had a significant impact on health care costs. The plans can reduce costs by controlling the utilization of services, negotiating better rates with providers, and using cost-saving strategies such as case management. Managed care plans have successfully controlled the costs of services by reducing the number of unnecessary services and procedures, which is done by incentivizing providers to practice cost-effective medicine and reducing the number of referrals to specialists. The plans have also successfully negotiated better rates with providers; managed care plans can negotiate discounts by offering them incentives such as lower administrative costs and higher patient volumes (Alley et al., 2016). Lower administrative costs allow managed care plans to pass the savings on to their members through lower premiums and co-payments. They also reduce costs by using cost-saving strategies such as case management, which requires a healthcare provider to manage a patient’s care. It allows the provider to coordinate care across different providers and services, resulting in cost savings.
Compensation of service providers is different from other plans; in managed care, it reduces expenses and costs of services. Under traditional fee-for-service arrangements, providers are paid a set amount for each service they provide, regardless of the cost of that service. Under managed care, however, providers are typically compensated on a capitated basis, meaning they are paid a set amount for each plan member, regardless of their services. Macleod (2017) explains that with such a plan, the elderly can easily manage lifestyle diseases despite financial strains. This incentivizes providers to provide care in the most cost-effective manner possible, as they are not compensated for services that are deemed to be unnecessary or too costly. However, this has affected the availability of certain services. Managed care plans often limit the types of services available to members and the number of providers or facilities that provide those services. This can result in fewer patient options and limit access to certain types of care that may be more expensive or specialized.
Findings
The findings from the studies on the impact of managed care on healthcare utilization and cost are generally positive. Managed care has been shown to reduce the cost of healthcare services and improve the quality of care and outcomes (Clark et al., 2001). Furthermore, managed care has been shown to increase the use of preventive services and decrease the use of unnecessary services. However, there are some drawbacks to managed care. One of the significant criticisms of managed care is that it has reduced access to care, as providers are limited in what they can offer under the managed care model. Additionally, managed care plans often limit the choice of providers and services available to patients, which can lead to dissatisfaction with the care received.
Recommendations
To improve the managed care system, the plans should be designed to ensure patients have access to the care they need. This can be done by increasing the number of providers and services available under managed care plans. The plan should also provide quality care; quality improvement initiatives should be implemented to ensure that providers deliver the best possible care. Besides, the plan should ensure there are many choices for services and providers to ensure that the needs of patients are met. Another recommendation is providing transparency with the plans to ensure patients make informed decisions.
Conclusion
Managed care has had a significant impact on healthcare utilization and cost. It has changed how providers and insurers work together to ensure that care is provided effectively. The managed care system has resulted in changes in how healthcare services are paid for and how providers are compensated, as well as changes in the types of services available to patients and their availability.
References
Alley, D. E., Asomugha, C. N., Conway, P. H., & Sanghavi, D. M. (2016). Accountable health communities—addressing social needs through Medicare and Medicaid. N Engl J Med, 374(1), 8-11.
Artiga, S., & Hinton, E. (2019). Beyond health care: the role of social determinants in promoting health and health equity. Health, 20(10), 1-13.
Clark Jr, C. M., Snyder, J. W., Meek, R. L., Stutz, L. M., & Parkin, C. G. (2001). A systematic approach to risk stratification and intervention within a managed care environment improves diabetes outcomes and patient satisfaction. Diabetes Care, 24(6), 1079-1086.
Conrad, P. (2005). The shifting engines of medicalization. Journal of health and social behavior, 46(1), 3-14.
MacLeod, S., Musich, S., Hawkins, K., & Armstrong, D. G. (2017). The growing need for resources to help older adults manage their financial and healthcare choices. BMC geriatrics, 17(1), 1-9.
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