WK1A3: Please use APA format and list and site all sources and references: 2- to
ID: 110601 • Letter: W
Question
WK1A3:
Please use APA format and list and site all sources and references:
2- to 3-page Microsoft Word document
You have been presented an outstanding opportunity to serve as a graduate student intern for the chief executive officer (CEO) of a large HCO. The HCO is an HMO model and originated approximately a century ago as a small rural hospital. Due to the rural setting, the HMO model flourished and, over the years, expanded throughout the region. Today, the HMO has a presence in over eighteen counties and has a number of competing interests from for-profit and not-for-profit HCOs in the region.
The board of directors recently approved the acquisition of two regional hospitals. First, the HCO decided to acquire a small rural critical-care-access hospital in a relatively remote county. The interest in acquiring the hospital is to service the existing population and expand the reach of the HMO. Second, the HCO decided to acquire a private full-service hospital in a moderate-size city (population forty-two thousand). The HCO’s move is strategic in nature, preventing the sale of the hospital to its for-profit competitor, and will gain the region its sole emergency department level 2 (two) trauma center with helicopter transport while giving the HCO the ability to service its growing HMO membership in the area.
Based on the above information:
Evaluate the various HMO models (staff, group, and network) and identify the model that would probably be best suited for the region. Justify your answer.
Research and comment on the importance and applicability of the various levels of emergency department trauma care. Investigate the exemptions afforded to a critical care rural hospital with respect to Medicare reimbursement and accreditation.
Elaborate on the difference between an HMO and an accountable care organization (ACO).
Explain the concept of capitation, its importance to the HMO and participating providers, and how the concept of capitation varies with the ACO model.
Explain patient-centered care and its importance in healthcare delivery
Please use APA format and list and site all sources and references:
2- to 3-page Microsoft Word document
Explanation / Answer
Evaluate the various HMO models (staff, group, and network) and identify the model that would probably be best suited for the region.
HMOs operate in a variety of forms. Most HMOs today do not fit neatly into one form; they can have multiple divisions, each operating under a different model, or blend two or more models together. In the staff model, physicians are salaried and have offices in HMO buildings. In this case, physicians are direct employees of the HMOs. This model is an example of a closed-panel HMO, meaning that contracted physicians may only see HMO patients. Previously this type of HMO was common, although currently it is nearly inactive.In the group model, the HMO does not employ the physicians directly, but contracts with a multi-specialty physician group practice. Individual physicians are employed by the group practice, rather than by the HMO. The group practice may be established by the HMO and only serve HMO members ("captive group model"). An HMO may also contract with an existing, independent group practice ("independent group model"), which will generally continue to treat non-HMO patients. Group model HMOs are also considered closed-panel, because doctors must be part of the group practice to participate in the HMO - the HMO panel is closed to other physicians in the community.
If not already part of a group medical practice, physicians may contract with an independent practice association (IPA), which in turn contracts with the HMO. This model is an example of an open-panel HMO, where a physician may maintain their own office and may see non-HMO members.
In the network model, an HMO will contract with any combination of groups, IPAs (Independent Practice Associations), and individual physicians. Since 1990, most HMOs run by managed care organizations with other lines of business (such as PPO, POS and indemnity) use the network model
Elaborate on the difference between an HMO and an accountable care organization (ACO).
Health Maintenance Organizations (HMOs) experienced rapid growth in the 1980s and 1990s as payers sought to restrain rapidly rising healthcare costs. HMOs required members to select a primary care provider who also served as a gatekeeper to specialists and costly medical services. The theory was that the gatekeeper would improve quality by coordinating care and contain cost by reducing utilization.
HMO enrollment peaked in 1999 and has been diminishing ever since, and today is approximately half the enrollment in preferred provider (PPO) plans. The relative shift reflects the high value consumer’s place on their ability to move freely about the healthcare system with no constraints.
The latest talisman of cost control is the accountable care organization (ACO). The foundation of the ACO model—similar to the HMO—is provider accountability for care coordination and the ability to restrain an unsustainable cost trend. Providers are reimbursed on both their ability to generate efficiencies that reduce costs and to meet certain quality metrics.
The biggest difference between the two models is that ACOs don’t utilize a primary care gatekeeper. Patients are free to seek care from any provider they choose, whether a member of the ACO or not. Therefore, in order to assess performance, patients must be attributed, or assigned, to an ACO provider based upon an analysis of claims data. There are several attribution algorithms, but the most common is retrospective attribution based on a plurality of primary care. The patient is attributed to the provider with the highest percentage of that patient’s primary care visits or costs over some historic period, subject to some minimum percentage threshold (sometimes as low as 25%). The operative assumption is that patients will continue to utilize the same provider in the future.
That assumption is highly problematic, particularly if the attribution is based on a plurality of care. A Milliman analysis of 2008 Medicare and commercial claims data revealed that fewer than 30% of high-utilizing Medicare patients received more than 70% of their primary care from their plurality provider. The comparable figure for similarly high-utilizing commercial patients was less than 10%. Clearly, the ability of patients to freely choose their provider undermines the ability of the assigned provider to effectively manage the cost and quality of care.
Those who say there’s a significant difference between the HMO of old and its modern incarnation, the ACO, claim that the former was simply looking to cut the expensive low-hanging fruit of excess utilization, while the latter is aiming higher to improve overall system performance to restrain costs. Notwithstanding the lofty rhetoric, in practice both models have to ration care to control costs. The HMO did it through a gatekeeper; the ACO, however, lacks that resource and must rely on voluntary patient acquiescence.
It’s well-established economic theory that a rational purchaser will consume an economic good to the point its marginal value to the purchaser is equal to its marginal cost, i.e., will demand medical services to the point that their marginal value to the patient is equal to the patient’s low out-of-pocket cost. This results in a level of utilization demand well in excess of what can reasonably be considered cost-effective care from a larger societal point of view. To be successful, ACOs are eventually going to have to find a way to ration care by restricting their patients’ incentives or desire to seek care outside the network.
Two ways of achieving this objective are emerging: narrow and ultra-narrow provider networks; and reference pricing. A narrow network is a limited group of doctors and hospitals selected based on their demonstrated ability to deliver cost-effective care. A health plan sponsor of a narrow-network ACO will not cover medical services obtained out-of-network or it will charge substantially higher copayments or higher coinsurance rates, providing a strong financial incentive to patients to stay in the ACO.
A second strategy, reference pricing, is designed to guide enrollees to hospitals that provide expensive medical procedures below a certain price threshold. Rather than limiting the provider network, reference pricing maintains access to a broad network. The enrollee is given provider cost information, then decides whether to be treated at a lower-cost provider with no out-of-pocket expense beyond typical cost sharing, or seek care at a higher-price facility with additional out-of-pocket above the reference price.
The economic effect of narrow networks and reference pricing is to limit consumer choice, not unlike the role of HMO gatekeepers. As ACOs begin to construct barriers to out-of-network care, the difference between ACOs and HMOs will effectively disappear. In both cases, limiting consumer choice is necessary to control costs and keep premiums affordable.
Today it’s simply assumed that consumers who once rejected the gatekeeper restrictions of HMOs will accept a new model of care that employs different methods to achieve the same end. That assumption hasn’t yet been tested, and it may—or may not—turn out to be true.
Explain the concept of capitation, its importance to the HMO and participating providers, and how the concept of capitation varies with the ACO model.
Capitation is a payment arrangement for health care service providers such as physicians or nurse practitioners. It pays a physician or group of physicians a set amount for each enrolled person assigned to them, per period of time, whether or not that person seeks care. These providers generally are contracted with a type of health maintenance organization (HMO) known as an independent practice association (IPA), which enlists the providers to care for HMO-enrolled patients. The amount of remuneration is based on the average expected health care utilization of that patient, with greater payment for patients with significant medical history.
An accountable care organization (ACO) is a healthcare organization that ties payments to quality metrics and the cost of care. ACOs in the United States are formed from a group of coordinated health-care practitioners. The ACO adopts alternative payment models (e.g., capitation). The ACO is accountable to patients and third-party payers for the quality, appropriateness and efficiency of its services. According to the Centers for Medicare and Medicaid Services (CMS), an ACO is "an organization of health care practitioners that agrees to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it"
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