A look at Managed Care Myth
Posted: Thursday, May 20, 2010
by Rose-Marie Chaperon
Chaperon Consulting, LLC
Prior to the managed care world, insurance companies were more lenient in paying out patient claims. During the 1980s and early 1990s, the spiraling costs of health care threatened to bankrupt the country (Platt, 1996). In Florida alone, health care expenditures increased 278% between 1980 and 1991. The state's total health care bill was $35 billion in 1991 and $38 billion in 1992; therefore it was time for an intervention (Platt, 1996). Due to the dilemma, legislation decided to make quality healthcare available to the public by enacting the Healthcare Reform Act of 1992. Today there are three major types of managed care, Health Maintenance Organizations (HMO) Preferred Provider Organizations (PPO) Point-of-Service (POS) plans.
When a patient presents to a healthcare provider for services, under an indemnity plan, the provider would order all types of unnecessary test to prevent a lawsuit. A lot of patients were subjected to unnecessary stress as doctor's order unwanted medical tests even during routine medical tests, these test were putting a huge strain on the health care system in the United States. Therefore unwanted test means which also falls under not meeting the medical necessity requirement, the result is a denial from the insurance company. When a healthcare provider does not have a contract with an insurance company, the provider does not have to write-off the non-covered portion off as a denial.
In the early 1980's this myth was based on facts because almost 100% of test had to be authorized by an HMO provider prior to services been rendered. These tests included services rendered in an emergency room. Physicians were not allowed to provide treatment a patient covered under an HMO without contacting the HMO to receive what is called an authorization number. Once that emergency authorization number was obtained, if the patient was in need of additional healthcare services such as a 23-hour observation or an inpatient admission, an additional phone call had to be made to the insurance provider to obtain additional authorization
Currently this myth is no longer factual, managed care has evolved greatly. Most outpatient radiology procedures do not need to have prior authorization for services as long as services are been rendered by a participating provider. In addition, all invasive outpatient procedures not related to cosmetics are automatically covered. Certain high dollar procedures such as dialysis, transplant, cardiac cauterizations require prior authorization from the insurance company. As long as the treating physician can provide a treatment plan and can justify the medical necessity, the procedure will be covered (American Hearth Association, 2009).
Participation in managed care organizations (such as the HMO or PPO) is becoming increasingly more widespread. As with every decision one must investigate, when one chooses a health plan, the person needs to make sure every little detail is covered, especially if the covered person is in poor health. It is best to educate yourself, whether you're learning more about today's health insurance plans, how to save money or understanding the basics of managed care. The best decision is to choose wisely.
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