Background: Managed care contracts allow the provider and managed care organizat
ID: 124200 • Letter: B
Question
Background: Managed care contracts allow the provider and managed care organization to create a relationship that defines the rights and obligations of each party. Examples of managed care organizations include HMO, PPO, and POS.
Assessment: Select one managed care organization and create a two-page hospital inpatient managed care contract. The contract can be written from the perspective of the MCO.
1. Your contract should address information from a minimum of 5 of the following areas:
Reimbursement levels and parameters
Administrative cost criteria
Provider cost and responsibility
Volume
Risk assumption criteria
Claims payments and eligibility determination
Eligibility determination and prior authorization
Dispute resolution
Contract Termination
2. Provide a detailed explanation stating how each of your selected criteria should be written to protect the MCO.
Explanation / Answer
1.Health Maintenance Organization(HMOs):
HMOs is one of the types of Managed care organizations.It is a type of health insurance with the primary goal of keeping its member healthy. Health maintenance act was passed in 1973. From 1980 to 1989 the HMOs enrollment increased to 36 million.
Reimbursement levels and parameters:
The physician employed under HMO contract are usually salaried and often receive a bonus or incentive for their performance.Not salaried physician are often reimbursed through capitation or discount fee-for-service (FFS) contract. Under capitation reimbursement, the physician receives a monthly fee based on the number of enrolled members assigned to the physician on that particular month. Under FFS reimbursement, the physician receives payment for the services they provide for a health plan patient.
Administrative cost criteria:
The healthcare policy leaders believe that the HMOs could better perform healthcare delivery, manage resource utilization, and implement preventive care and disease management. It has a list of covered benefits and used resources in a cost-effective manner.
Provider cost and Responsibility:
The traditional indemnity insurance covers the fee-for-service claims for all providers. It covers the individual's total healthcare experience and coordinates care by processing all encounter claims. It reduces pharmacy costs by 40%. Thus it balances between health care delivery and health outcomes even though the cost is rising.
Risk Assumption Criteria:
HMOs manages the financial risk in the healthcare delivery by the involvement of all stakeholders in the cost-effective decisions.All providers (physicians, pharmacy etc) must accept the discounted reimbursement. Physicians may receive incentives as Pay-for-performance. Drug companies offer discounts and equipment vendor offers to acquire contracts.
Claims payment and Eligibility Determination:
The provider should be within the network. HMO does not pay for out of network. The exceptions to stay in the network are true emergencies, pre-arrangement in case of specialty care. Cost-sharing, deductibles, coinsurance, copayments are usually low in HMOs. It does not require hassle bill and number of visits or procedures for claiming. It has claim form and the single bill for the membership card at the time of service is enough for the copayment.
2. Managed care is the primary choice in U.S for delivery of healthcare in a cost-effective manner. It has special policies and procedures with all stakeholders. It manages the financial risk of healthcare delivery. Managed care organizations spending enormous resources on health and often paying to assess such services.
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