Managed Care and Nursing Managed care has become a central concept in the healthcare industry, reshaping the way health services are delivered, financed, and managed in the United States. Understanding what managed care entails, its types, and its impact on healthcare delivery is essential for healthcare professionals, including nurses who play a pivotal role in patient care within managed care systems.
What is Managed Care?
Managed care refers to a healthcare delivery system designed to provide quality care while controlling costs. The system has evolved significantly over the past 50 years, particularly after World War II, when American healthcare experienced unprecedented growth. The introduction of social programs like Medicare and Medicaid expanded access to healthcare for many Americans, resulting in a corresponding increase in the number of healthcare professionals and facilities.
Under the traditional fee-for-service model, insurers would reimburse healthcare providers based on the services rendered, without significant regulation or oversight. This model, coupled with the rapid development of medical technologies, led to increased healthcare utilization and skyrocketing costs (Light, 1991; Robinson, 1995). As a response to these challenges, managed care was introduced as a way to deliver healthcare services efficiently while maintaining an acceptable level of quality and cost control.
Managed care combines prepaid, capitated payments for health insurance with a group medical practice model for delivering services (New Brander & Eichler, 2001). In this system, payments to physicians and hospitals are made through an agreed-upon capitated reimbursement, meaning providers receive a set amount per patient regardless of the number of services provided.
Managed Care and Health Care
Managed care aims to provide high-quality healthcare while maintaining cost efficiency. It achieves this by spreading financial risk across a large population, emphasizing preventive care, and managing healthcare services through case management techniques such as preauthorization, utilization reviews, and discharge planning. Managed care organizations (MCOs) operate on four basic models: Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), Exclusive Provider Organizations (EPOs), and Point-of-Service (POS) plans.
Managed care became more prominent in the 1970s as a strategy to control healthcare costs, which had been escalating rapidly. Before the 1960s, only a few MCOs existed, such as the Community Hospital Association of Elk City, Oklahoma (founded in 1929) and the Kaiser Foundation Health Plan in California (founded in 1942). By the mid-1990s, over 25% of the U.S. population (approximately 67 million people) was enrolled in some form of managed care. Today, more than half of all insured individuals are covered by MCOs, reflecting the significant expansion and impact of managed care on the healthcare landscape.
Benefits of Managed Care
Managed care offers several benefits to both patients and healthcare providers:
- Risk Spreading: Because premiums are prepaid by large populations, the financial risk is spread across many people, reducing the financial burden on any one individual or group.
- Focus on Prevention: Managed care emphasizes preventive services, which can help reduce the occurrence of chronic diseases and conditions, thereby lowering long-term healthcare costs. Preventive care includes routine check-ups, screenings, vaccinations, and health education.
- Case Management: Managed care uses case management to oversee and coordinate patient care. This includes preauthorization for certain procedures, utilization reviews to ensure that the care provided is necessary and appropriate, and discharge planning to facilitate smooth transitions from hospital to home care or other care settings.
Managed care organizations also benefit from cost control mechanisms such as peer review, rate setting, and the certification of need legislation, all of which aim to reduce unnecessary healthcare expenditures. Today, purchasers of healthcare are active in setting prices for health services and assessing quality, rather than being passive negotiators. This shift towards managed care has transformed the healthcare market by promoting efficiency and accountability.
Types of Managed Care
Managed care has evolved into several different types, each with its own structure and approach to managing healthcare delivery:
- Health Maintenance Organizations (HMOs): HMOs provide a wide range of healthcare services through a network of providers. Members are required to choose a primary care physician (PCP) who acts as a gatekeeper, coordinating all aspects of their care. Services outside the HMO network are usually not covered, except in emergencies.
- Preferred Provider Organizations (PPOs): PPOs offer more flexibility than HMOs by allowing members to see any healthcare provider. However, members receive greater benefits when using in-network providers. PPOs do not require referrals for specialist care, making them more flexible than HMOs.
- Exclusive Provider Organizations (EPOs): EPOs are similar to PPOs but have more restrictive networks. Members must use providers within the EPO network to receive coverage, except in emergencies. EPOs often have lower premiums and out-of-pocket costs compared to PPOs.
- Point-of-Service (POS) Plans: POS plans combine features of both HMOs and PPOs. Members choose a primary care physician but can see out-of-network providers at higher out-of-pocket costs. POS plans offer some flexibility while still maintaining the cost controls associated with HMOs.
Managed Care and Research
As managed care organizations have proliferated, research into their effectiveness, cost, quality, and impact on the healthcare environment has also increased. Initially, research focused on variations in health services provided across the United States (Wennberg & Cooper, 1999). More recent research examines issues such as the cost-effectiveness of managed care, the quality of care delivered, and the broader impact of MCOs on health outcomes.
Theories such as the principal-agent theory (Buchanan, 1988) and social exchange theory (Blare, 1964) are used to explain the behaviors and outcomes of individuals within the managed care system. These theories provide insights into how managed care structures influence the decisions of healthcare providers and patients, highlighting the interplay between economic incentives and care quality.
The Role of Nursing in Managed Care
Nurses play a critical role in managed care by serving as patient advocates, educators, and coordinators of care. Within managed care settings, nurses often act as case managers, coordinating care for patients with complex health needs and ensuring that they receive appropriate services while minimizing unnecessary utilization of resources. Nurses are also instrumental in promoting preventive care, educating patients about healthy lifestyles, and helping them navigate the managed care system.
Managed care environments require nurses to be knowledgeable about cost-effective care practices and to be skilled in communication, collaboration, and leadership. As the healthcare industry continues to focus on cost control and quality improvement, the role of nurses in managed care will become increasingly important.
Future Trends in Managed Care
The future of managed care is likely to involve a continued emphasis on quality care and cost reduction. This focus will increase the need for preventive services and community-based care models that can provide efficient, high-quality care outside of traditional hospital settings. Managed care organizations will continue to explore innovative ways to manage healthcare delivery, such as incorporating telemedicine, expanding community-based programs, and utilizing data analytics to improve care coordination and outcomes.
Additional research is needed to substantiate the positive cost-to-quality ratio of managed care. Studies should focus on evaluating the long-term benefits of managed care, including its impact on patient satisfaction, health outcomes, and overall healthcare costs. As the managed care landscape evolves, healthcare professionals, including nurses, must stay informed about these changes to adapt their practices and continue providing high-quality care to their patients.
Conclusion
Managed care has fundamentally transformed the healthcare industry by shifting the focus from fee-for-service models to a more coordinated, cost-effective approach to care delivery. Through various types of managed care organizations, such as HMOs, PPOs, EPOs, and POS plans, the healthcare system has sought to control costs while maintaining or improving care quality. Nurses play a vital role in this system, serving as advocates, educators, and coordinators of care. As managed care continues to evolve, ongoing research and innovation will be critical to ensuring that it meets the needs of patients and healthcare providers alike.