Impact Paper: Development of Managed Care National American University Emily Gregg March 20, 2016

Impact Paper: Development of Managed Care In the early years of healthcare, everything was different. Prepaid medical group practices were created to assure that the clinic had patients regularly, and money coming in. It was the first example of modern capitation, which is a payment per patient per period instead of a fee for service that was previously the standard. This was the early years of managed care. The field has come a long way. Prepaid medical plans became known as insurance, and now there is a variety of them. The aspects that influenced their creation will be discussed, as well as some perspectives between different parties within the field. Some issues have had a large influence on doctor-patient relationship. According to Peter Kongstvedt, some of the issues that impacted the previously stated relationship include cost containment, the development of Managed Care Organizations (MCO) such as Health Maintenance Organizations (HMO), Point of Service plans(POS), and Preferred Provider Organizations (PPO), and the pressures that these MCO’s placed upon the Primary Care Provider (PCP). Prior to MCO’s the provider physician had a main goal which was to manage the patient’s care. In the new MCO plans, the PCP had a new job, a sort of Gate-keeper status between the patient and his or her ability to obtain care that was of higher specialty and cost. The MCO pressured the PCP to keep cost low, which meant to deny the higher cost services and offer low cost ones instead until all low cost services were exhausted. These pressures made the patient’s question if the provider indeed had their own needs in mind, or were simple robots at the control of their contracts with MCO’s. This process hassle used administrative headache as a way to discourage use of high cost services. There had to be a medical reason and justification for each service from the PCP and neither the PCP nor patient desired the administrative hassle, so some services simply got denied for lack of justification regardless of medical need (Kongstvedt, 2016). There are both positive and negative aspects of Managed Care Organizations on the Health Care Industry. One positive aspect is that because these organizations were growing so rapidly, the patient could expect lower copays. The lower portion of payment for previously expensive procedures was a huge incentive to participate in these plans. Also, the use of in-network providers was another way patient cost was reduced. A negative aspect of this was that pressure was put on the patient to have services rendered at the primary care level for that low cost, rather than to go through the administrative endeavor and pay a higher payment to have a more specialized physician perform the procedure ((Kongstvedt, 2016). In conclusion, the Managed Care Organizations have helped shape the Health Care Industry by both positive and negative feedback. There have been examples of positive feedback, such as rapid growth of MCO’s because of all the incentives to use them and all the benefits provided within them. In addition, there are negative aspects to the changes like the businessmen and entrepreneurs who capitalized on smaller more rural companies by liquidizing them or selling them to larger organizations within the field (Kongstvedt, 2016). Both of these made change. As to whether the changes are more or less positive, I would have to say there is too vast an amount of information to consider to side with either. I can simply state the unbiased pros and cons.

References: Kongstvedt, Peter, 2016. Health Insurance and Managed Care: What they are and how they work 4th ed. (pgs 1-36) Jones and Bartlett Learning: Burlington, MA.