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Rationale of Reimbursements Systems Paper: Select one of the four health care payment systems (cost based, prospective payment, managed care based, or single payer. This system is what you will also discuss in Week 3 and Week 6.) Perform a literature search to find a professional journal article that discusses the rationale of your selected system. Summarizing the model. Conclude this overview with your critique of the system's effectiveness, strengths, and weaknesses. Paper, references and citations should be in APA format. The source should be from professional journals and/or government documents similar to those cited in the Selected Readings Page. Use at least three such references, one of which must be from the applicable era. (e.g. Medicare originated in the mid 1960's, managed care in the 1980s, etc.). This paper will be the initial portion (edited down) of your final assignment.
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This a sample of PAPER Format:
Individual payments for health care services received have undergone many changes over the past one hundred and fifty years in this country. For many years a fee for service system was in place. This was acceptable at the time because costs were low. However, as costs began to rise, changes in the system occurred as well. Private insurance companies started to form in the 1920s to help consumers afford medical care when needed. Through several evolutions over the years and due to increased costs of medical care, we saw new market oriented public policy initiatives starting to form by the 1980s. In 1970 health care spending represented 7% of the national income, but by 1993 it grew to 13.4% (White, 2004). Health care costs were starting to get out of hand and something needed to be done to address it. In the public sector, important initiatives included the introduction of the Medicare Prospective Payment System, a range of state reform efforts, and the Clinton administrations health reform initiative. At the same time, private insurers introduced changes that set in motion a fundamental restructuring of relationships in the health care market place, ultimately giving rise to managed care (White, 2004). This paper will discuss the rationale, effectiveness, strengths, and weaknesses behind this relatively young reimbursement payment system called managed care.
Several reasons explain problems with health care costs. Insured consumers did not have the means or incentives to effectively choose their health care providers and services and this created inflationary distortions in the purchasing system (White, 2004). There was also a lack of provider incentives, a presence of inappropriate restrictions on payer and provider behavior, including insurance rules and bans on advertising (White, 2004). A possible solution to these problems would be to harness the market forces, enhancing performance while preserving access and choice (White, 2004
Rationale:
Managed care is a desirable option for several reasons. First, competition could promote more efficient production of services by squeezing out waste, by generating incentives to manage care more effectively, and by making use of preventive services to maintain the health of enrollees. Second, competition could also squeeze down high provider price margins associated with ill functioning markets. Third, competition could serve to rationalize the adoption of new technology.108 As an added attraction, financial barriers to services could be largely eliminated because cost sharing would no longer be necessary to control use (White, 2004)
Effectiveness, Strengths and Weaknesses:
Giving insurance companies more responsibility introduced new problems: incentives to under provide care, avoidance of high risk patients, coordination problems, and the risk of inflexibility in the provision of services (White, 2004). Advocates responded that these problems could be solved by imposing accountability on plans through competition. To facilitate their choices, consumers would be provided with appropriate price and quality information to enable them to assess cost and quality tradeoffs between plans. The net result would be not only to create incentives for consumers to seek value for money in selecting their insurance, but to provide a way for consumers, through their shopping decisions, to directly impose market discipline on plans (White, 2004). It appeared that there were several costs saving initiatives created by establishing managed care. Consumers making poor choices, lack of consumer incentives, providers overcharging, and providing competition to control health care costs were problems to be solved by managed care.
Problems with managed care started surfacing. A study done by the New England Medical Center in Boston found 54 percent of Medicare managed care patients experienced a decline in health during the four years of the study, while only 28 percent of Medicare fee-for-service patients experienced a similar decline (Peoples Medical Society, 1997). Compared to Medicare fee-for-service, managed care plans typically cover more services and impose lower out-of-pocket costs but is limited to the providers authorized by their plan (Scanlon, 1998). The question of quality of care and services provided started to chink away at the armor of managed care.
The Balance Budget Act also played a role in determining the amount of services to be offered. Research proved that plans were being overcompensated. Discrepancies arose from a wide difference of payments due to location. The BBA realigned how it made payments for managed care. The result may be a decrease in services provided (Scanlon, 1998).
The dissatisfaction with managed care for some consumers has resulted in the change of some insurance plans altogether. Significant numbers of health plans have reduced their reliance on managed care tools at a time when health insurance premiums have returned to double digit rates of growth in many markets. Faced with fewer instruments for curbing utilization and constraining provider payments, health plans have attempted to mitigate premium growth by shifting costs to consumers. These developments promise to lighten the administrative and financial burdens that managed care has imposes on physicians and hospitals, while leading consumers to accept higher costs in exchange for more choice (Mays, 2004).
Even though managed care experienced success in decreasing cost growth and improved financial access, its growth in the mid-1990s was accompanied by mounting tensions between consumers and providers and the emergence of a managed care backlash. Early proponents of managed care argued that Managed Care Organizations (MCO) could promote both quality and efficiency and constrain costs. Critics now challenged these claims with growing intensity and argued that managed care was failing to make good on its promise; rather than delivering managed care, MCOs were delivering managed costs. Key issues included concerns about provider choice, quality of care, and impacts on provider markets (White, 2004).
It appears that the future of managed care seems uncertain. Despite it strengths and effectiveness early in its conception, it has faced serious dilemmas most recently. How can manage care contain the rapid increase in costs and the rise in the number of uninsured? Will it be able to endure the technological advances and keep up with the high demand of quality of care? In order for managed care to endure it must consider changes in its marketing strategies, renew its efforts to manage patient care by changing the limitation of choice in health care providers.