Guide to Managed Healthcare

By

Joseph A. Velky

[ Table of Contents]
 Go to Chapter [1] [2] [3] [4] [5] [6] [7] [8] [9] [10] [Glossary]

Chapter 1

 

Introduction

Managed-care or managed competition has become the main form of health benefit delivery in the 1990s. Employers and Government are selecting this option frequently to control the spiraling costs of medical care. Hospitals, physicians and other medical providers have already responded by contracting with hundreds and even thousands of different managed care plans.

This guide is written to train medical staff on the administration of patients covered by a managed-care plan in the era of managed competition. The Managed Healthcare Information Services (MHIS) Guide to Managed Healthcare was written to: provide an overview of managed-care administration; explain the various administrative requirements and cost-containment programs of the managed healthcare insurers, and provide a methodology to identify and classify managed-care patients to the correct managed-care payor.

Providing medical care to patients covered by a managed-care plan requires some additional administrative steps to assure appropriate reimbursement.

First, patients must be identified as covered by a specific managed-care payor.

Second, the payor and/or the payor’s agent(s) must be contacted to verify eligibility, benefits, and obtain any required authorizations.

Third, the contractual administrative rules and procedures of the payor must be completed to ensure payment for services.

In many cases medical decisions need not be affected by the patient’s coverage by a managed-care plan. If the care is shown to be medically necessary and cost effective it can be covered. Each managed-care plan has designed its administrative programs to deter care that the plan believes is not cost effective. The managed-care plans require that care be coordinated with the plan for selected procedures on a prospective basis.

There are many different variations of managed-care payors. Health maintenance organization (HMO) and preferred provider organizations (PPO) are two types of managed-care plans. New variations of managed-care payors are exclusive provider organizations (EPO) and point of service plans (POS). Each managed-care plan establishes its own administration requirements for hospitals, physicians, and other providers. There are many variations and few standards for the administration of the managed-care plans.

The most difficult aspect of administering managed-care patients is identification of who, what, where, when, and why a particular form, call, or process must be completed for a specific managed-care plan.

The MHIS system provides effective administration for managed-care contracts. It will help in administration of patients who have coverage with managed-care insurers with whom you contract and for patients covered by plans with which you do not contract.

Managed-Care Today

Health insurers have established new managed care plans to respond to the era of managed competition. There are thousands of companies marketing managed care health insurance plans. Health Maintenance Organizations (HMOs), Exclusive Provider Organizations (EPOs), Preferred Provider Organizations (PPOs), and Point of Service Plans (POS) are common forms of managed-care plans. Managed-care payors are rapidly replacing the indemnity health insurers. Government programs are offering Medicare and MediCal beneficiaries a managed-care option. Workers’ compensation payors have contracted with preferred provider organizations. Some HMOs are adding administration of workers’ compensation benefits for enrolled employers.

The HMOs, EPOs, PPOs, and POSs may be local, regional, or national organizations. PPO and EPO networks have been created with only one insurer or with hundreds of insurers, payors, employers, and unions. Some payors belong to one managed-care network exclusively; others belong to many different managed-care networks or contract with one or more separate HMO, EPO, PPO, and POS plan.

Some insurers include all their subsidiary companies in their provider contracts as part of the HMO, PPO, EPO or POS networks. Sometimes these subsidiaries have similar names, sometimes they have unrelated names. Other insurers with subsidiaries exclude their subsidiaries from some or all their provider contracts or execute different provider contracts for different companies owned by the insurer.

Patient Administration

Providing medical care to patients covered by a managed care plan requires some additional administrative steps. Typically medical decisions need not be affected by the patient’s coverage by a managed care plan. If the care is shown to be medically necessary and cost effective it can be covered. Each managed care plan has designed its administrative programs to deter care that the plan believes is not cost effective. The managed care plans require that care be coordinated with the plan for selected procedures on a prospective basis.

Each health maintenance organization (HMO) and each preferred provider organization (PPO) has established its own administration requirements for hospitals, physicians, and other providers. The most difficult aspect of administering managed care patients is knowing who, what, where, when, and why a particular form, call, or process must be completed for a specific managed care plan.

Managed Healthcare Information Services (MHIS) has created this service to provide a concise, accurate, up-to-date, and consolidated reference for most managed-care contracts, manuals, and releases.  

The Managed-Care Directory has a section for each network. These sections contain the key policies, procedures, and insurer requirements for the networks; they also contain addresses and phone numbers for each program participating in a network.

This MHIS guide has been written to:

1. Discuss the basic objectives of managed-care programs;

2. Identify various administrative requirements and cost-containment programs of the managed-health-care insurers;

3. Provide an overview of managed care; and

4. Provide a methodology to integrate the multiple objectives and programs of the hundreds of different managed-care insurers into the providers’ administration process.

Using the MHIS managed-care directories and/or MHIS software will guide you to more effective administration of your managed-care contracts. It will also help in administration of patients who have coverage with managed-care insurers with whom you contract and for patients covered by plans with which you do not contract.

Whom to contact

Dealing with managed-care plans can be complicated. Each managed-care plan has its own set of policies for benefit interpretation, prior authorization, cost-containment programs, and claims requirements, and its own internal organizational bureaucracy.

Large employers and/or large unions may impose unique requirements on the network or insurer. Some employers or insurers use independent-review organizations and other third parties to administer their health-insurance contracts.

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