Q2 Module Six assignment 09302023
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Purdue University *
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N678
Subject
Health Science
Date
Dec 6, 2023
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docx
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2
Uploaded by chang541
Running head: MANAGED CARE ORGANIZATIONS
1
1.
The primary cost-saving features of managed care include selective contracting, utilization
review, and risk-sharing arrangements (Henderson, 2023).
Selective Contracting: Managed care organizations negotiate contracts with selected
healthcare providers who agree on specific medical practice styles and predetermined fee
schedules. This allows managed care plans to control costs by contracting with providers willing
to work within budget constraints.
Utilization Review: Managed care organizations implement utilization review processes,
including preadmission, concurrent, and retrospective reviews, to ensure the appropriateness and
efficiency of medical services. These reviews help prevent unnecessary hospital stays, tests, and
procedures, thereby reducing costs.
Risk-Sharing Arrangements: Managed care plans shift some financial risk to healthcare
providers through risk-sharing arrangements. In capitated payment systems, providers receive a
fixed payment per patient, incentivizing them to deliver cost-effective care and discourage
overutilization of services.
2.
The move to managed care in the medical marketplace has had a mixed impact on the
quality of care. The evidence regarding the effect of managed care on quality is diverse and
context dependent. Managed care systems have been successful in adopting many cost-saving
features and competing effectively with fee-for-service systems; however, the quality of care in
managed care plans can vary based on factors such as the specific managed care arrangement,
provider network, and utilization review processes (Henderson, 2023).
Some studies have shown that managed care plans can provide equal or better-quality care
compared to fee-for-service plans; however, there are cases, often highlighted in the media,
where managed care plans have been criticized for denying necessary care (Henderson, 2023). It
is important to note that the perception of quality can sometimes be influenced by individual
experiences, leading to a complex image of managed care's impact on care quality.
3.
Capitated Basis
VS
Fee-for-Service Basis
Pros: Capitated payments provide financial predictability for providers. Physicians receive
a fixed payment per patient, encouraging preventive care and cost-effective treatments.
Capitation can promote better coordination of care, focusing on overall patient health rather than
individual services(Tummalapalli et al., 2022).
Cons: There are concerns about under-provision of services to save costs. If capitated
payments are too low, providers might limit necessary treatments to stay within budget
constraints. This can potentially compromise the quality of healthcare.
Pros: Fee-for-service payments reward providers for each service rendered, potentially
ensuring that patients receive all necessary treatments. This system offers financial incentives for
more tests, procedures, and appointments, which could lead to comprehensive healthcare.
Cons: Fee-for-service payments can incentivize overutilization of services, driving up
healthcare costs (Tummalapalli et al., 2022). Providers might focus on quantity rather than
quality of services, leading to fragmented healthcare.
In the context of risk-sharing contracts, capitated payments incentivize providers to
manage costs effectively, but there is a delicate balance required to ensure that quality of care is
not compromised. Risk-sharing contracts can encourage better care coordination and prevention-
focused practices. However, there is always a risk of undertreatment if financial incentives are
not aligned with quality care standards.
Running head: MANAGED CARE ORGANIZATIONS
2
References
Henderson, James W. (2023). Health Economics and Policy. Cengage Learning.
Tummalapalli, S. L., Estrella, M. M., Jannat-Khah,
D. P., Keyhani, S., &
Ibrahim,
S. (2022).
Capitated versus fee-for-service reimbursement and quality of care for chronic disease: A
US cross-sectional analysis.
BMC Health Services Research
, 22(1), 1-19. DOI:
10.1186/s12913-021-07313-3.
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