MANAGED HEALTH CARE -
AN INTRODUCTION

Managed Health Care Today and Chiropractic OnLine Today is pleased to provide to Doctors and the Public, current information about the present Health Care System.

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In 1994, President Clinton attempted to restructure the current Health Care system in the United States. In this first installment, Chiropractic OnLine Today will provide viewers with background into the development of the current reimbursement system in the US.

Health Insurance began back in 1929, when an administrator at Baylor University Hospital in Dallas, Texas, conceived the nation's first health plan. For the sum of fifty cents a week, Dallas schoolteachers received up to twenty-one days of free hospital care. This eventually led to the creation of the present insurance giant, Blue Cross/Blue Shield.

Today there are approximately 74 state and local Blue Cross/Blue Shield plans across the nation, covering approximately 73 million people.

Also entering the game were a number of private Insurance companies, such as Prudential and Travelers', to name a few. Then, the Federal Government became a player, as they created two different programs, Medicare and Medicaid. Finally, add into the mix a number of self-insurers. These are companies that insure their own employees and are governed by the federal Employee Retirement Income Security Act (ERISA). Add all the players together and you have a general overview of those who control third party Reimbursements in this country.

This appears to provide the consumer with a choice in the type of health insurance coverage they would like to purchase. A brief description of these choices follows.

TRADITIONAL FEE-FOR-SERVICE

These insurance plans have been the most common over these past few decades. These plans usually have 3 parts: Those that reimburse for Hospital charges, those that reimburse for Doctors bills, and those that reimburse for Major Medical coverage, i.e., filling in the gaps between the other two parts.

After a Deductible has been met by the patient, the insurance company will reimburse a percentage of the fees charged by the physician for any services rendered.

Some criticisms of this type of reimbursement plan include the following:

First, while traditional insurance policies protect against the financial costs of illness, preventive health care such as regular physical checkups, well-baby care, breast examination, and birth control, are rarely covered in the basic package.

Further, many analysts feel that this system is largely to blame for the current crisis in health care. Stanford University economist Alain Enthoven contends that doctors who are paid for whatever they recommend are prone to prescribe expensive treatment and order many tests. Further, if the patient's insurance company is willing to pay for these services, the patient has no incentive to demand lower costs. "The traditional system reward hospitalization, high technology, and extensive testing at the expense of prevention, 'well-body' care, and less costly treatments."

(CONSUMERS' LEGAL GUIDE TO TODAY'S HEALTH CARE. Issacs, Swartz, C @1992, Mifflin Company, p.42).

MANAGED CARE

This term has become the "catch-phrase" of the '90's, but what exactly is Managed Health Care?

As mentioned above, under the traditional Fee-For-Service reimbursement choice, health care costs have skyrocketed. The initial tally's from 1993 include the following figures:

--Medical inflation in 1993 was 5.4 percent, according to the Labor Department.

--Though medical prices are not going up as quickly as in previous years, the Commerce Department estimates total health spending will break the $1 trillion mark this year for the first time.

Thus, there appears to be a need for controlling this rise in Health Care costs in this country. Enter the concept of Managed Health care. With Managed Health care, insurance plans COMPETE for contracts to care for large numbers of patients - most of them in groups.

While the concept of Managed Care is relatively a new concept to the East Coast, Managed Care has become firmly entrenched on the West Coast. For example, 96% of Los Angeles employers offer Managed Care programs, and more than 70% of their employees choose it.

As the concept of Managed Care has been around for a while, but it is only recently that it has penetrated the East Coast area.

The two more common types of Managed Health care programs, include Health Maintenance Organizations (HMO's) and Preferred Provider Organizations (PPO's).

HMO's provide a comprehensive range of medical care in return for a fixed monthly fee from the consumer. This fee covers all visits to doctors in the HMO, except for a $3 to $5 charge for each visit. The monthly fee usually includes preventive care as well.

When the consumer enters an HMO contract, they choose a Primary Physician, also known as a GATEKEEPER. This Gatekeeper will refer the patient to a specialist if they believe that the patient needs to see one.

According to the Group Health Association of America, as of 1992, there were 37 million Americans enrolled in approximately 600 HMO's.

PPO's on the other hand function in the following manner. An insurance company, employer, or a union, will Contract with a group of Physicians to provide care at DISCOUNTED RATES. While the patient/member is not required to see a participating provider, there is plenty of financial incentive for them to stay within the plan.

PPO's come in many forms, and in 1991 it was estimated that 26 million Americans belonged to some form of Preferred Provider Organization.