MEDICARE FOR MORE: MANAGED CARE IS THE FUTURE OF MEDICARE
Managed care plans are on the rise. Currently, approximately 42% of all Medicare beneficiaries are enrolled in a managed care plan by way of a Medicare Advantage plan. Each year, the percentage of enrollees increases. What do these increasing numbers mean for the future? Will managed care plans replace other types of healthcare systems? What is managed care? Managed care, also referred to as a Managed Care Organization or MCO, is a healthcare system that requires its members to visit certain providers and hospitals. In exchange, managed care plans control the cost of treatment, making it more affordable for those enrolled in one of these plans. Most of the common insurance plans available today include one or more features of managed care. Provider networks, provider oversight, and prescription drug tiers are all features of managed care plans. They aim to reduce costs while still delivering quality care. Provider Networks The primary feature of managed care plans is establishing provider networks in geographical locations. The provider network will include doctors, specialists, labs, hospitals, and other healthcare facilities. Members who reside within that geographical area must see a provider within the plan’s service area. Providers in these networks agree to provide services at reduced costs. The health plan will cover more of the cost if you stay within your plan’s network. Some types of managed care plans, like Health Maintenance Organizations or HMOs, only provide benefits if the member sees an in-network provider. Preventive Care Incentives To help control costs further, managed care plans place emphasis on preventive care. These plans often include 100% coverage for annual checkups, routine screenings, and many vaccines. Catching health problems in the early stage keeps this less costly and is also a benefit to the patient. Primary Care Providers (PCP) Most managed care plans require their members to choose a primary care provider and obtain a referral from them for any specialist visits. This ensures that the member’s PCP stays engaged in their patients’ care. Prescription Drug Tiers Prescription drugs are placed in different tiers. Common, generic medications are placed in lower tiers, while specialized, brand-name medications are placed in higher tiers. The higher the tier, the higher the out-of-pocket cost for the member. Generic medications typically use the same formula and active ingredients as their brand-name counterparts. Offering generic options for less cost is another way that managed care plans help reduce expenses. Prior Authorization Many managed care plans will require their members to obtain prior authorization for certain procedures or treatment. They do this to understand the medical necessity of the recommended service and ensure their members are not undergoing treatment they do not need. Most of the common insurance plans available today include one or more features of managed care. What are the drawbacks to managed care plans? There are two main drawbacks to managed care plans: network limitations and concerns about the quality of care. Network Limitations Managed care plans limit which providers and facilities their patients can receive care from. In larger urban areas, this may be less problematic because there is still a wide variety of providers. In rural areas, however, this can be extremely limiting. Quality Care Concerns Providers are held to the same legal and ethical standards, regardless of network participation. Even so, that doesn’t prevent members from questioning the motivation and quality of care they receive from managed care providers. Some members worry that treatment decisions will be based more on insurance recommendations than the recommendations of the provider. Others are concerned that since in-network providers are paid less, they will try to make up for lost money by taking on more patients, thereby decreasing their overall level of care. Why the sudden surge in managed care plans? For many years, doctors and other healthcare providers were paid on a fee-for-service basis. (Some still are.) While this practice may have been reasonable at first, it has quickly become similar to piecework payment. The more work done, the more money earned. The result of this system has been skyrocketing healthcare costs. The United States has the highest healthcare costs in the world – as much as 60% to 100% more than other industrial countries. Managed care plans are a direct response to this problem. Employers who are seeking a group health plan for their employees and governments purchasing coverage for Medicaid and Medicare beneficiaries are interested in decreasing the amount they spend for insurance. Managed care plans have been successful at delivering quality care options at a much more affordable price than the “unmanaged care” we are slowly leaving behind. One thing remains certain. Managed care plans will have a huge presence in the future of Medicare. Individuals have become unable to afford the high price tag associated with healthcare. As more beneficiaries demand lower healthcare costs, more providers choose to contract with insurance carriers. This allows the Medicare Advantage program to offer plans in more geographical locations, both urban and rural.