Managed+care+plans

=**__Managed Care Plans__**=

Managed care plans are pre-paid health insurance plans, in which the consumer pays a premium in turn for some type of health care. The insurer then takes the premiums from certain population **//(state, region, large group of comparable people)//** and attempts to contract with heath service providers **//(hospitals, drug manufacturers,//** **//physicians//****//)//** to provide some form of healthcare for the insured. Through contract negotiations the insurance company can reduce certain costs of healthcare services to the insured. Also, through these negotiations limits can be placed on types of services provided or where the insured can receive treatment.

=**__Managed Care Plans vs. Indemnity Insurance__**=

Managed care plans have taken the place of indemnity insurance plans. Indemnity insurance usually only comes in effect after a person suffers from a major illness, and acts basically like a form of reimbursement.

Managed care plans acts as a preventative healthcare measure, in that they offer certain incentives **//(a cheaper cost)//** to the insured for going the doctor’s office earlier and can reduce the number of larger more serious claims to the insurer.

=**__Types of Managed Care Plans__**=


 * HMO or Health Maintenance Organization –** Form of managed care plan in which the insurance company controls all aspects of the healthcare. Members of the HMO must receive their medical treatment from physicians and facilities within the HMO network. A primary physician looks after members assigned to them and is the only on who can refer them for special services. For the most part a member will not receive coverage if they go outside the network.


 * PPO or Preferred Provider Organization –** A PPO has similar qualities to that of a HMO in respect that it has a network of physicians and facilities, but the insured is not restricted only to those physicians and facilities. The insured can go outside the network to receive healthcare, but they will have to pay a higher deductible or copayment.

Picture Source -** [|**http://www.aishealth.com/MarketData/images/**]**
 * POS or Point of Service Plan –** The POS service plans is a hybrid of both the HMO and PPO in that the insured can choose their primary physician who will act as their network, but they can go outside of that network to receive healthcare at higher deductibles or copayments. If the primary physician refers the insured for services outside the network then the insurance company will likely pick up the bill.
 * (This graphic segments the entire healthcare insured population…….with roughly 86% of the people in some form of managed care plan)

= =

=__Government Managed Care Plans__=

Medicaid- **This managed care plan is a jointly financed public program between the state and federal governments that povides medical insurance to certain segments of the poor population that do not have private health insurance. The states administer the program and have the authority in determining eligibility and the amount of medical benefits provided. The costs of Medicaid have been increasing over the years due to more enrollees, the increase in medical prices, and increases in the number of elderly and disabled people who are in need of long term care.**

Medicare- **This managed care program is a federally financed program that provides medical insurance to the elderly. The program began in 1966 with more than 19 million enrolled, and 35 million enrolled by the year 2004. The program is for individuals that are age 65 or older. The program is made up of four parts consisting of (Part-A) the hospital insurance program, (Part-B) the supplementary medical insurance program, (Part-C) the medicare advantage program, and (Part-D) which provides a prescription drug benefit plan.** = = =Questions=

Question – Which is a type of manage care plan? B. Preferred Provider Program C. Point of Service Plan D. All of the Above** Answer – D
 * A. Health Maintenance Organization

Question – Manage care plans now consist roughly what percentage of all health insurance plans? B. 85 Percent C. 60 Percent D. 35 Percent** Answer - B
 * A. 10 Percent

Question – The most dominant type of managed care plan is? B. PPO C. POS D. None** Answer – B. The PPO is the most often used managed care plan and is used primarily for its flexibility.
 * A. HMO

Question – Consumers pay a _ for some type of health coverage in the future? B. Wage C. Premium D. None Of the Above** Answer – C.**
 * A. Rent

Graphically illustrate and Explain about how an HMO can reduce medical cost when they possess monopsonistic buying power in a certain geographical market.

IF an HMO has monopsonistic buying power in a market they can influence the amount being reimbursed to hospitals. In a free market they face a competitive price P1 and quantity Q1. Since they are a monopsonist they set Quantity where demand meets the marginal factor cost. This in all reality will force hospital to receive a price (P2) much lower than the market price for services.

Question – Which of the following is not a form of HMO B. Group Model C. Network Model D. IPA Model E. None Of the Above** Answer – E.**
 * A. Staff Model

Sources:http://www.aishealth.com/MarketData/MCEnrollment/MCEnrol_mc02.html [|www.americanheart.org/presenter.jhtml?identifier=4663] [|www.agencyinfo.net/iv/medical/types/indemnity-**managed**.htm] http://en.wikipedia.org/wiki/Managed_Care

Santerre, Rexford E. and Nuen, Steven P. __Health Economics: Theories, Insights, and Industry Studies.__ Thompson South-Western. 2007. Pgs. 267-276.