What Managed Care Techniques Do Health Plans Use?

Health plans, HMOs, health care providers and other health care organizations use a variety of managed care techniques to improve health care quality, coordinate care, prevent illness and injury, and control costs. The following are the most common managed care techniques.

Prevention and early treatment

• Health care quality can be improved and costs reduced by preventing health problems from occurring in the first place and by providing early diagnosis and treatment to prevent small health problems from becoming big ones.

• Health plans encourage patients to get primary and preventive care by covering preventive services such as annual physicals and prenatal and well-baby care at little or no cost to the member.

• Health plans use outreach and consumer education to encourage patients to seek preventive care, and help consumers improve their health through diet, exercise, smoking cessation programs and other activities.

Improvements in the quality and effectiveness of health care treatments

• Managed care organizations have created a revolution in the development of new methods of improving the quality and effectiveness of health care treatment.

• In the past, treatment practices often varied substantially and there was no coordinated approach for tracking differences or determining which practices were most effective. Managed care organizations began tracking differences in treatment and outcomes and using medical research and practice guidelines to help physicians identify the most effective treatment strategy.

Coordination of care

• In the past, services were generally provided by a fragmented nonsystem of independent physicians, specialists and hospitals that did not have any formal system for communicating and coordinating a patient's care.

• Managed care health plans create linkages between providers, assemble care teams and encourage coordination of all of a patient's care.

• Many managed care health plans encourage a patient's family-practice physician or other primary care provider to serve as the "case manager" to coordinate all of a patient's care.

Utilization review

• Many managed care organizations use utilization review to evaluate the necessity, appropriateness and efficacy of health care services, procedures and facilities.

• Utilization review is an effective way of tracking services received by a patient and making sure that the patient does not receive services that are unnecessary, inappropriate or even harmful.

• Utilization review also helps ensure that a patient receives the most cost-effective alternative course of treatment when there are several equally effective options.

• Utilization review also provides the attending physician with additional clinical resources and data from the health plan's quality management and technology assessment programs to help the physician decide on the best course of action for the patient.

Health care provider relationships and incentives

• Managed care organizations have developed new provider incentives and contractual relationships that allow physicians and other health care providers to provide primary care, prevention and early intervention without being penalized financially.

• Managed care organizations provide their providers with substantial support, medical expertise and other assistance that was lacking in the old system, including practice guidelines, technology and research assessments and access to specialist consultants.

Appropriate care settings

• Managed care uses the most appropriate care setting for each patient. In many cases, treatment in alternative settings results in lower costs, less inconvenience for the patient and reduced incidence of complications.

• The following are some alternatives that have found broad acceptance: alternative birthing centers, home IV therapy, ambulatory outpatient surgery units, diagnostic testing and home health care.

Generic drugs and formularies

• Managed care plans encourage the use of generic drugs when they can be safely substituted for brand-name drugs. Generic drugs are chemically identical to and generally as safe and effective as the original brand-name drugs, but cost less.

• Health plans also use drug formularies. A drug formulary is a list containing the names of certain prescription drugs that a managed care plan covers. Formularies can enhance the overall quality of care because they can be structured to include only those drugs that are most effective or widely used in modern medical practice, and exclude those that are marginally effective or overly expensive or that have become obsolete. Once in place, a formulary is reviewed and updated regularly to remain current with new developments in pharmacology and medical practice.

Provider credentialing

• Provider credentialing is a process through which a health plan reviews a physician or other health care provider's training and qualifications prior to becoming part of the plan's network. Health plans use provider credentialing to ensure that all providers are adequately trained and competent to provide health care services.
  

Provider networks

• Many managed care organizations use provider networks to control quality, utilization and costs. Some managed care organizations employ their own staff physicians and operate their own clinics. Others contract with a limited network of independent providers and clinics.

• Most of today's health plans offer health plan options that allow enrolled members to select health care providers who are not in the health plan company's preferred provider network. Usually a higher copayment is charged. These "point-of-service" health plans combine the cost and quality advantages of a network health plan with the expanded choice of traditional indemnity insurance.

Reasons a health plan might use provider networks:

1. A provider network makes it easier for health plans and providers to manage quality, track utilization of services and implement quality improvements.
   
   
2. Health care providers often will agree to discounted fee arrangements in return for the guaranteed volume that results from being part of a health plan's network.
   
   
3. Provider networks allow a health plan to control its potential costs for electronic data systems, provider training, quality improvements, billing and claims processing and provider support.
   
   
4. Provider networks make it possible for health plans to avoid the high cost of excess provider and service capacity.

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