Managed Healthcare Case Study

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7. Managed care seeks to control health care costs through controls on price, demand, and supply. Describe at least 5 common strategies by which it does this. Include some discussion of each to at least identify the mechanism and intent of the strategy.
Health Maintenance Organizations (HMOs)
A member of HMO is required to pick a primary care physician as a gate keeper to coordinate all services. The chosen primary care physician will also be the person who refers a member to another specialist. The cost sharing are usually low in an HMO, however, the member has to use the providers in the HMO’s list. The member receives bills from HMOs rather than providers.5
Independent Practice Association (IPAs) IPAs are organized associations, which
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This payment transfers the financial risk to the providers. Thus, providers don’t like it, and they tend to focus on the quantity rather than quality of the service to get more payment. Patient will undertake the outcome risk and they may don’t like this payment due to the potential outcome risk.
b) Fee for Service
Under this type of payment, providers will be paid according to the service they conduct. The providers only need to consider about whether the service they provide covered by the health insurance policy. A provider/ physician bear no finical risk when they refer a patient to another physician. In this way, payers don’t like FFS while providers like it. Patients don’t care much about FFS.
c) Bundled Payments
Under this type of payment, providers need to assume financial risk of the services for certain treatment and the cost related to preventable complications. Payers pay for the packaged pricing and the providers need to cover the difference. This brings financial risk to providers and sometimes lead to the result that physician won’t conduct extra services, even that are necessary and benefit to the patients. In this way, payers like Bundled Payments while providers don’t like it, and patients don’t care much about Bundled Payments but they need to take outcome risks of

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