Why will physicians in this new environment replace MHAs?

The competitive forces of managed care, capitated payment, cost constraints, and the formation of health networks are among the major precipitating factors leading to the employment of additional executives and middle managers with clinical backgrounds. These factors will require our health leaders to know how to cut costs without seriously impinging on the accessibility and quality of patient care. Physicians with leadership and management skills, and with prior hands-on patient care expertise, will continue to be sought after in the foreseeable future by various types of health organizations. With this scenario, health services management generalists are predicted to experience increasing difficulties to secure senior positions in the health industry,     

An overview of managed care in state Medicaid programs

The National Governor's Association predicts that Medicaid will account for 28 percent of total state spending in 1995, double the 1991 level. During 1992, total Medicaid enrollment reached 31.6 million beneficiaries, up 4.7 million (17.5 percent) from 1991. The total expenditure of $118.2 billion in 1992 was up 25 percent from the 1991 level of 94.5 billion. A recent General Accounting Office (GAO) report, revealed that, in 1990, 43 percent of 99 million emergency department visits were for minor ailments. From 1985 to 1990, Medicaid emergency department visits increased 34 percent, compared to 19 percent growth in all emergency department visits. A Department of Health and Human Services Inspector General Report on Medicaid recipient emergency department usage recommended that states develop a comprehensive initiative to reduce nonemergency usage of the emergency department, including increased implementation of managed care options. During 1992, 42 states used some type of Medicaid cost containment measure, with managed care being the most frequent choice.     

Capitation and informatics

When physicians, hospitals, and allied health professionals bill for services they render, their information processing requirements are relatively simple, at least compared to those of capitated organizations. When payers (insurers or employers) accept financial risk for the health care services of beneficiaries, they have usually invested in claims processing, membership tracking, and, under managed care, utilization review and provider profiling systems. But payers, for the most part, have not invested in electronic collection of clinical information about beneficiaries, nor have they tended to keep all claims they have processed in electronic form for study after accounts are settled and payments disbursed. In this article, we will explore why informatics is so important to capitated organizations and why payers that have traditionally taken financial risk for insuring the health care costs of populations are also learning about the importance of informatics.     

Population health--a new discipline

A new discipline--population health--has emerged with the potential to profoundly impact the U.S. health care system. Multiple forces stimulating the new population health concept include: (1) the increasing dominance of managed care and critical scrutiny of its development; (2) the continued refinement of clinical effectiveness and outcomes assessment research; (3) increasing public policy emphasis on cost-effectiveness accountability for health care services; and (4) a new focus on the importance of collaboration between the medicine and public health enterprises in this country. The need for sophisticated analysis of population health determinants has never been greater in history. New programs, like the University of Wisconsin-Madison's interdisciplinary Graduate Program in Population Health, address the need for analysis, dissemination, and application of information about the many factors affecting the health of populations.     

Evaluating risk: global fees and episodic care

In 1999, two articles in The Physician Executive -- "Part I: Global Theory and the Nature of Risk (July-August)." and "Part II: Towards a Choice-Based Model of Managed Care (October-November)" -- outlined the flaws of orthodox managed care theory and highlighted the unique advantages of moving to a genuinely market-based model, which included the concept of direct contracting for integrated episodes of care. This follow-up focuses on comparing an episode contracting system to a traditional capitated program and outlines the features that make this approach much more attractive to physicians, payers, and most importantly patients.     

The new management competencies: a global perspective

How will tighter controls over health expenditures, an increased supply of qualified doctors, and clinical acumen becoming more critical in allocating health resources under market-driven, capitated payment-type plans affect physicians? Throughout the world, they will play a greater role in the management of health facilities and services. To train doctors to provide leadership in these new, more market driven environments, education should focus more on the integration and coordination of clinical and managerial processes, an approach outside the scope of most curricula now offered. New managerial competencies will be required by the paradigm shift away from simply delivering quality health services to tighter cost containment efforts. Physicians will play an increasing role in how medical facilities and services are organized and financed--the blending of clinical and managerial-financial-information science processes will be paramount in these educational pursuits.     

Utilization management key to HMO success.

Utilization management has a long history in prepaid health programs, especially in capitated, prepaid risk programs that were the precursors of HMOs. Utilization management is commonly considered to be that set of systems and procedures used to ensure that a patient's medical needs are met at the least cost possible consistent with adequate quality. Examples of measures taken in managing utilization include avoiding unnecessary surgery, unnecessary hospitalization, excessive hospitalization, and unnecessary diagnostic and therapeutic measures, and encouraging use of less expensive means of care, such as home health care services. Also included, and of great importance, is obtaining those services at the least possible cost through favorable contracting for services.     

How should managed care physicians be paid?

When paying a physician for medical or surgical services, most patients expect the traditional bill or charge for that encounter or visit. While most people also pay health insurance premiums, few patients expect to prepay for their health care. But that is the foundation of most managed health care systems-prepaid medicine. PPOs, IPAs, and HMOs are typically health care providers linked together to provide services to a set population for a specific prepaid fee or "capitation" payment. Other providers contract with these managed care insurers to receive a predetermined and often "discounted" professional fee for services. These managed care organizations have already gone through a number of stages in determining how physicians are to be compensated for their services, and further changes loom on the horizon.     

Attracting qualified physicians to underserved areas. Part 2. Pay physicians more to practice in underserved areas.

With health networks searching for additional market share and with a projected 30.2 million to be enrolled in Medicaid HMOs by 2000, more health executives will be weighing various strategies of how to attract qualified physicians to practice in poor inner-city and rural areas. Most frequently cited as solutions are supplying more physicians, encouraging more medical school graduates to pursue primary care residencies, and modifying the number of international medical graduates entering U.S. residency programs. Part I of this article, which appeared in the November/December issue of The Physician Executive, reviewed the efficacy of these approaches. The second part explores a more pragmatic option: to simply improve the working conditions and pay substantially more to physicians who practice in "less desirable" locations. Although this idea is consistent with economic principles, drawbacks must be considered, such as: (1) the American taxpayers' reluctance to finance a more costly health care delivery system for the poor; (2) the inherent conceptual difficulties of a capitated Medicaid HMO serving as the linchpin for organizing, financing, and delivering care for the underserved; and, (3) many providers being expected to react in a fairly litigious manner to such an approach.     

Building a vertical provider system

There is probably no geographic area in the United States in which the health care environment is more turbulent than that of Southern California. Long before President Clinton's proposals began serious national debate on health care reform, a massive provider-driven realignment of the system was occurring in that region of the country. Multispecialty medical groups have generally led the way and have acquired ever larger managed care populations through merger and acquisition of other groups and practices. Hospitals, hampered by large fixed capital bases, have struggled to reinvent themselves as cost-effective and primary care-friendly environments in order to be attractive to managed care physicians. Almost ignored in this reconfiguration has been the university teaching hospital. This article discusses one attempt to reconcile contractually an integrated, capitated, and managed care-oriented health care system with an academic medical center in a strategic alliance.     

Status quo won't work

The division between those who provide health care services and those who pay for them may be widening. Costs continue to rise, quality remains ill-defined, and there don't seem to be any easy answers to the dilemma. Joseph W. Duva, Director of the New York Region Health/Welfare Benefits Consulting Practice of Ernst and Young, believes the answer has been found. While Director of Employee Benefits at Allied Signal Corp., he was instrumental in the formulation of a total managed health care plan for employees. He recently founded the Managed Health Care Association to share the experience at Allied Signal with others and to provide a business forum for exploration of the managed care concept. Duva's views on managed care as a cost containment strategy were the subject of an interview conducted by Physician Executive at the National Conference of Physician Executives in San Antonio in May.     

Legal issues in accepting capitation

The effort to reduce the cost of medical, hospital, and ancillary services increasingly focuses on shifting the financial risk for the cost of these services to those who provide them. Shifting arrangements include capitation for physicians classified as "primary care" physicians; capitation arrangements that include primary and specialty services; risk shifting to medical groups, IPAs, and other physician organizations; as well as the packaging of physician and hospital services on a "full risk," "per case," or other basis. Accepting financial risk for the cost of medical and other health care services, as well as the responsibility for managing the provision of services, may very well be the only remaining opportunity for providers to maximize reimbursement and maintain administrative and clinical self-direction. However, physicians must work with managed care organizations (MCOs) through negotiation of contracts and throughout the relationship to make sure: Unnecessary financial and legal risks to the MCO and physicians are eliminated. Risks that cannot be eliminated are apportioned between the MCO and physicians. All risks are managed in a coordinated fashion between the MCO and physicians.     

Physician financial relationships in the new regulatory environment

In recent months, physicians have been under scrutiny by the federal government with respect to their financial relationships with both drug manufacturers and home care companies. This heightened scrutiny can be attributed, in part, to the attention that has been placed on health care fraud and abuse in this country as a major cause of rising health care costs. Federal investigators currently are examining physician financial relationships in light of the Medicare/Medicaid antikickback statute to determine whether certain payments made to physicians are intended as inducements to refer patients or to prescribe certain products. "Health Law" is a regular feature of Physician Executive contributed by Epstein Becker & Green. Mark Lutes of the law firm's Washington, D.C., offices serves as column editor.     

The role of organizational ethics committees

Health care services are increasingly provided in an atmosphere that is fractured by conflicting ethical concerns. This trend had been most noticeable in institutional settings. In response, hospitals have for many years had ethics committees. Their purpose has been to guide providers, patients, and families when decisions with ethical implications have to be made. The shift in focus within the health care delivery system away from hospitals and more to managed care systems and to domination of decision making by primary care providers suggests that expansion of the ethics committee concept may be advisable.     

Bringing baby home: a comprehensive case management program for obstetrical services

Originally presented to the Society of Home Health Care Management of the American College of Physician Executives at its November 16, 1993, meeting in Tucson, Ariz., the program described in this article was the winner of the College's 1994 Innovations Award in Medical Quality Management, sponsored by Merck Sharp & Dohme. The program shows the potential of case management for both improvement in the quality of care and containment of costs for a managed care population with a substantial Medicaid segment. This article is part of a continuing series on innovative programs in home health care.     

The future of American health care in the "post-reform" era

"As the debate over health care reform rages in Washington, the market is reforming itself. For any given market, it's a question of 'How soon will it hit?', not 'Will it hit?'" Health care reform and market restructuring are ushering in a new era of integrated health care. Although the future is not fully clear, there are at least three competing models for the creation of regional and statewide health systems that will integrate the financing and delivery of services to large enrolled populations of consumers: Payer-driven networks. Provider-sponsored systems. Partnership models. Whatever the future scenario, physician executives will play a larger, more dominant role. Research on integrated health systems has identified three critical success factors for future success: physician-hospital integration, clinical integration and information integration. For managed care to be successful, there must be clinical leadership. The essence of managing care is clinical efficiency, based on "critical-path" treatment protocols and real-time patient care management, supported by integrated information systems.     

Diagnosis-related group system. Can we still earn a living caring for sick people?

Medicare and Medicaid patients are starting to enroll in managed care organizations, as government tries to lower costs of caring for the elderly, disabled, and poor. Because they are the most likely to be sick, taking care of them imposes serious risks on hospitals and medical groups. The federal government uses the diagnosis-related group (DRG) system to reimburse hospitals. The system depends on physicians documenting diagnoses and complications. Physicians see illness as unpredictable, and so feel that detailed documentation of severity is futile. The government and health plans nevertheless follow case mix index and create hospital and physician profiles, relying on the existing imperfect system. For providers to be recognized for the value they add to the care of the sick, physicians must learn to use the DRG system to best advantage, or risk being driven out of business.     

Legal implications of managed care arrangements

Prior to the 1980s, managed care was virtually nonexistent as a force in health care. Presently, 64 percent of employees in America are covered by managed care plans, including health maintenance organizations (20 percent) and preferred provider organizations (44 percent). In contrast, only 29 percent of employees were enrolled in managed care plans in 1988 and only 47 percent in 1991. To date, the primary reason for this incredible growth in managed care has been economic-market pressure to reduce health care costs. For the foreseeable future, political pressures are likely to fuel this growth, as managed care is at the center of President Clinton's national health care plan. Although there are numerous legal issues surrounding managed care, this article focuses primarily on antitrust implications when forming managed care entities. In addition, the corporate practice of medicine doctrine, certain tax issues, and the fraud and abuse laws are discussed.     

Sustainability as the lynch pin of public policy and industry initiatives

Does managed care have a sustainable future? So far, managed care has not lived up to its promises and potential. Admittedly, the health care system prior to managed care was a non-system. But its features included committed health care professionals, caring local institutions, freedom of choice, and laws reflecting public confidence. And it was based on the assumption that needed health care services are a customary, moral, and implied legal right of U.S. citizens. In contrast, today's version of managed care is characterized by financial and legal manipulation, "choice" constricted by provider selection of physician panels, and laws reflecting lack of public trust. Managed care can survive its initial foolish years, if it heeds the voices of those urging that two priorities be reflected in public policy, legislative efforts, and business practices. One of these priorities is accountability for today's actions. The other is preserving this country's health care resources. This article explored the concept of sustainability--the need to strike a balance between seeking immediate profit and preserving available resources.