A managed care organisation (MCO) is an organisation that manages and delivers the benefit of family care when one enrols himself and his family to be a member of a MCO. Without any interference from managers or payers, a doctor can make his clinical decisions and can bill for the services he has offered (National Academies Press).
The service of a MCO is aimed at controlling the cost of services offered to members, to manage the services, and also to measure the performance of health care providers like doctors, hospitals, and pharmacies. There are different types of managed care plans, the most common being the Health Maintenance Organisations (MCOs) and the Preferred Provider Organisations (PPOs). MCOs manage the financing of a healthcare service as well as deliver a healthcare service (Health).
Individuals choose their own physician from a list provided to them by their chosen plan. If a specialist referral is required, different plans have different rules. In some plans, members have the right to select any specialist they want from the list provided by the chosen plan, while in some other plans, the member’s primary doctor (PCP) needs to make a referral (Health).
The concept of managed care originated in the USA, but now has spread to other parts of the globe particularly north European countries. In the USA, it has risen to dominate heath care delivery (National Academies Press). Following the passage of Health Maintenance Organisation (HMO) Act of 1973, the healthcare delivery revolution has been growing rapidly day by day. Managed care seems to be developed in response to the growing needs of the economy and the society (Navarro, Cahill).
Currently, the managed care that is available has grown in response to the purchaser’s i.e., MCO’s demand to control costs. Yet, it is intended to provide high quality care and cost effective healthcare facility to people (Sekhri, 2000).
Practically, a MCO’s primary responsibility is to care for a population through a healthcare system that emphasizes upon the prevention of the disease, monitors care through primary, secondary, and tertiary services, encourages providing the care by most appropriate health care provider, and promotes cost efficient use of services by aligning incentives (Sekhri, 2000).
This is ideally how a MCO should function, but it is found that most MCO’s plans are focused on negotiations on price discounts with providers like hospitals and physicians. Employment of more sophisticated managed care tools like disease prevention, disease management, aligning incentives, or patient education for prevention of the diseases is rarely seen (Sekhri, 2000).
There are several complaints expressed against the MCOs in the US with respect to cost savings, hospital reimbursements, and quality of care. Most complain that the cost savings claimed by the MCO are either not real or are not justifiable. Some other complaints are the physician compensation levels and the hospital reimbursements are too low; therefore, adequate healthcare cannot be expected. The quality of care provided by MCOs is substandard. Substandard means there is care denial, limited hospital stay, and limited access to specialists (Sekhri, 2000).
For reasons like these, MCOs usually find themselves under attack from all sides. Therefore, several US states have passed laws that allow healthcare plans to be sued for malpractice. Members vocally admit about denials of care and their lawyers’ claim of substandard quality of care and negligence (Sekhri, 2000).
Thus, managed care seems to be criticised across many areas. Complaints and claims like these by consumers/ providers indicate that MCOs would be using such things as a means of reducing their own costs. The attempt to regulate costs is because all MCOs have a built-in incentive to control their cost. Some also know MCOs by organisations that put a control on inpatient admissions and duration of stay in the hospital, adopt selective contracting with health care providers, and provide economic incentives to doctors (Deom, 2010).
Thus, typically a MCO would cut its costs by discounted reimbursement to physicians, hospitals, and pharmacies, increase premiums for excessive costs for plan sponsors, and premium share payments, coinsurance and copayments to policy holders or members (Navarro, Cahill).
Though the benefits of cost controlling measures of MCOs may be few, risks or disadvantages are plenty. To keep costs in control, MCOs have made significant changes in their healthcare delivery and benefit design, like the use of generic drugs before branded drug and increase in member coinsurance and copayments etc (Navarro, Cahill).
Based on multiple claims every day, MCOs have been able to measure their clinical and economic outcomes as well as their costs. With this, identification of top medical conditions is done with respect to its prevalence, incidence, cost, and several other parameters. In this way, implemention of disease management programs with these top diseases is easier, but the main disadvantage to a member is that, for the chosen health plan, he/she is required to pay a higher coinsurance and a higher copayment percentage, as well as higher deductibles and lower benefit caps. Besides, some critics point that a major disadvantage of achieving cost savings is it might result in too few services to be provided. Therefore, it is essential that a future consumer of a health plan must be well informed before he talks up a plan, must believe in the old saying “Prevention is better than cure,” so that he practices self-care for disease prevention and makes wise choices (Navarro, Cahill). It is necessary that all citizens are expected to be more responsible towards their own and their family’s health.
References:
- Summary: Managed Care Systems and Emerging Infections. The National Academies Press. Available at: http://www.nap.edu/openbook.php?record_id=9760&page=1
- Managed Care: Understanding our changing HealthCare System. Health. Missouri Families.org. Available at: http://missourifamilies.org/features/healtharticles/health39.htm
- Navarro, R., Cahill, J., Role of Managed Care in the US Healthcare System. Jones and Bartlett Publishers, LLC. Available at: www.jblearning.com/samples/0763732400/32400_CH01_Pass2.pdf
- Sekhri, N. (2000) Managed Care: The US experience. Bulletin of World Health Organisation. 78 (6), 830-844.
- Deom, M., Agoritas, T., Bovier, P., Perneger, T. (2010). What doctors think about the impact of managed care tools on quality of care, costs, autonomy, and relations with patients. BMC Health Services. Research, 10, 331.
