The
problem of providing satisfactory medical service to all the people of the
United States at costs, which they can meet, is a pressing one. At the present time, many persons do not
receive service which is adequate either in quantity or quality, and the costs
of service are inequitably distributed.
The result is a tremendous amount of preventable physical pain and
mental anguish, needless deaths, economic inefficiency, and social waste. The United States has the economic
resources, the organizing ability and the technical expertise to solve this
problem.
A
recent quote from a health policy analyst? Perhaps a member of Congress, or a
presidential candidate? It could be,
but isn’t. This statement is taken from a 1932 report by the national Committee
on the Costs of Medical Care that recommend the linkage of group practice to
prepayment for health services. A new
idea at the time? Not really. When this report was written, the concept of
organizing the delivery and payment of health services had already been
established. In fact, the roots of our
current delivery and financing structures emerged in the nineteenth century.
Defining Managed Care
“Managed
care” is term that suffers from some of the same amorphousness as does the term
“quality of care.” It can mean
different things depending upon the context or the user. But in theory, most would agree that one
concept is central to the definition of managed care: the integration, at some level, of the financing and delivery of
health services. In practice, managed
care is any health services arrangement in which a contract for both the
services and the payment is created between a provider and a purchaser (often
an employer or a government agency) on behalf of a group of consumers or
members. This represents a fundamental
shift from a system in which people with social or private health insurance
could autonomously seek care from the provider of their choice.
Today,
the term managed care serves as an umbrella for a range of organizational and
reimbursement mechanisms. Entities that
provide managed care are referred to as managed care organizations (MCOs), a
system under which a wide range of medical services is provided for a fixed amount
of money, negotiated in advance. Managed care systems typically include one or
more of the following features:
Many
kinds of organizations fit under the umbrella of managed care. Health maintenance organizations (HMOs),
preferred provider organizations (PPOs), independent practice associations
(IPAs), and exclusive provider organizations (EPOs) are but a few of the models
that differ on features such as provider payment mechanisms, provider
incentives, enrollee incentives, and risk assumption. Since their introduction into the mainstream of American
medicine, much has changed. Older
models have evolved and new models have emerged. Distinctions between them can be difficult to discern and
definitions have blurred.
The
concepts on which managed care is structured have been a part of the medical
services delivery system for many years.
Early efforts to provide prepaid group practice medical care were
undertaken by the Federal Government on behalf of military personnel and
merchant seamen as early as 1789 when the U.S. Marine Hospital Service was
established. Since then, private,
public, and voluntary sector programs have evolved to provide and finance
health care.
Prepayment
for physician services began as medical care arrangements in the railroad,
mining, lumber, and manufacturing industries around the turn of the last
century paralleling the industrialization of the western United States. Founded in 1910, the Western Clinic in
Tacoma, Washington is often cited as the first prepaid group practice. Its members were employees of the lumber
mills. By the late 1920’s, other
medical groups, including those organized by the Kaiser corporations, provided
health care services under a negotiated arrangement. Unique at the time, the Kaiser-Permanente Medical Care Program
owned its own hospitals and clinics.
Opening membership to the public, it became one of the largest non-government
prepaid programs for hospital and medical care. By 1945, the first prepaid hospital-physician cooperative was
organized by Dr. Michael Shadid in Elk City, Oklahoma. Between 1920 and 1950 a
number of prepaid plans emerged as alternatives to fee-for-service medicine and
many are still in existence today. By
the 1970’s, managed care models such as HMO’s were firmly established.
Prepayment
plans for hospital services arrived in 1929 when 1250 teachers formed an
arrangement with Baylor Hospital to provide them with hospital care on a
prepayment basis. A premium of fifty
cents per month provided hospital coverage for 21 days of semiprivate
hospitalization annually. The Blue
Cross hospital insurance system we have today arose from this model and laid
the groundwork for features of hospital reimbursement that were common for
years.
A note
to our readers: In response to requests for basic information about managed
care, we will present different topics in upcoming issues. In the limited space available in our
newsletter format, we can provide only a brief overview. We hope that those of you who have not had a
formal introduction to this material will find them interesting and helpful. Contact the editor for references or
suggested readings.
Humana Health Plans – Network Updates
As
of January 1, 2000, many Humana members will have access to a new pharmacy
benefit called the Rx3 plan. The Rx3 plan is a 3-tier copay plan that will
provide greater choice for Humana members.
The plan covers preferred generic (first tier, lowest copay), brand
drugs (second tier), and non-preferred drugs (third tier). This plan will allow physicians and patients
to expand their selection of medications and reduce the need to request prior
authorization reviews since most non-preferred drugs will be available at the
third tier copay.
If they have questions about their pharmacy benefit, remind members to call the customer service number on the back of their Humana ID card. Physicians and members may check the Humana web site at www.humana.com to inquire about drugs that are on the preferred formulary list.
Effective April 1, 2000, insulin pumps for Medicare+
Choice members with type1 (juvenile onset) diabetes will be covered by HCFA. An external infusion pump and related drugs
and supplies will be covered as medically necessary in the home setting. To continue coverage of the pump, the
patient must be seen and evaluated by the treating physician at least every
three months.
Remember…copayments should be collected for office
visits only when the member receives direct services from a physician. For services that do not require the
presence of a physician, the copay does not apply. Examples would include visits billed under CPT code 99211
(evaluation and management of an established patient that may not require the
presence of a physician), administration of a flu shot (without a physician),
or weight and blood pressure checks (without a physician).
Aetna Reminder on Claims Submissions
Aetna
US Healthcare is reminding providers about their policy on claims
submission. Claims for Aetna must be
submitted within 90 days of the date of service for payment consideration. Claims received by Aetna after 90 days will
not be paid. They are emphasizing this deadline in order to allow for prompt
payment of claims in compliance with the new prompt payment legislation. For dates of service in January 2000, they
are allowing a grace period of 120 days to submit a claim.
The
University of Illinois Physician Group also has a deadline for timely claims
submission. Claims for our capitated
plans (American HMO, Humana, HMOI, and UIHMO) must be submitted within 180 days
of the date of service. Claims
submitted after that time will not be paid.
Appealing these denials was reviewed in our November newsletter. Questions concerning claims issues may be
directed to Sandy Young at X5.4359 or syoung@uic.edu.
An
updated table outlining the details of various physician service contracts
including deadlines for claims submissions was recently distributed by e-mail
during the second week of February. If
you did not receive a copy please contact Sandy Young at syoung@uic.edu.
CPT Code and HCPCS Updates
In
case you haven’t already done so, please make sure that your inpatient and
outpatient physician/provider fee schedules and charge tickets have been
updated to include the latest code revisions, additions and deletions. Physicians and billing staff should be aware
of all important code changes in their area of specialization. Changes are effective for dates of service
on or after January 1, 2000. While
payors may differ on the time frames for accepting revised or new codes, claims
for codes that have been deleted for 2000 may not, as a general rule, be
submitted for services rendered after December 31, 1999. To minimize the
possibility of rejected claims, make sure your staff and billing service are
using updated codes.
To
provide clients with information about their products, services, and billing
procedures, the Provider Affairs Training Department of BlueCross BlueShield of
Illinois is offering free workshops for BCBSI providers. Sessions are appropriate for registration
clerks, billers, office managers, or others responsible for billing
professional fees. Registration
information can be obtained from Sandra Young at syoung@uic.edu
or at X5.4359.
Health Finest
Network
Health Finest Network (HFN) is fifth largest group health PPO in the Chicago area and one of our contracted health plans. Recently, HFN sent a mailing to all physicians regarding a new "CrashCare" product. This mailing is actually a contract amendment to the UIC Physician Group contract with HFN. Please disregard this letter. UIC physicians do not have individual contracts with HFN. Information about the new product will be distributed in a future mailing. Questions may be directed to Vince Savickis at vsavickis@uic.edu.
Federal Budget Includes Large Increase for Health Initiatives
Since
our last newsletter federal lawmakers returned to Congress, President Clinton
unveiled a number of health policy initiatives in his last State of the Union
address, and on February 7th he sent to Congress a federal budget
for fiscal year 2001 that calls for the largest increases to health care
spending since the 1960’s. Reaction
from public and private sectors were predictably swift acknowledging that
during an election year, public pressure and politics would shape the debate on
the divisive issue of health care funding and reform.
The
president’s budget totaled $1.835 trillion, including a surplus that is sure to
polarize the upcoming debate over how it has been derived and how it will be
spent. The proposal includes additional
funding for the Health Care Financing Administration, NIH and CDC budgets, and
other Department of Health and Human Services programs. The FDA would receive
$10 million to help protect consumers purchasing prescription drugs over the
Internet, and $16 million to address the problem of medical errors. The laundry list of health related
initiatives includes a $35 million dollar “reserve fund” to help pay “catastrophic”
drug costs as part of his previously announced Medicare prescription drug
program, and a $220 million program to help states provide full Medicaid
benefits to uninsured women whose breast or cervical cancers are detected
through federally funded screening programs. One of the largest initiatives
would overhaul Medicare and expand access to health insurance for an estimated
5 million of the 44 million Americans who are currently uninsured.
Financing
the federal budget always makes for interesting reading. Allocation of budget
surpluses, eliminating tax shelters and loopholes, tax credits, tax cuts, and
tax increases are all part of the financing package. To help pay for the Medicare initiatives, Clinton is proposing
$70 billion in Medicare savings over the next 10 years by way of reduced
payments to providers. The proposed $80
million increase for graduate medical education for payments to children’s
hospitals to help underwrite the cost of training new pediatricians would be
offset by a proposed $84 million reduction in the Title VII Health Professions
program, a program aimed at meeting health professional resource needs in
underserved areas.
In the January article The
Alternatives – A Growing Trend, annual spending on alternative therapies
was incorrectly reported at about $25 million per year. The correct figure is about $25 billion dollars per year. Those interested in learning more about
alternative medicine should visit the National Center for Complementary and
Alternative Medicine, National Institute of Health, web site at http://nccam.nih.gov.
The November 11, 1998 issue of the Journal of the American Medical Association
is devoted to the topic and is an excellent source of information and reference
links. For a comprehensive look at
alternative medicine use in the United States try “Trends in Alternative
Medicine Use in the United States, 1990-1997: Results of a Follow-up National
Survey, ” by David M. Eisenberg et al. (JAMA, Volume 280 (18): 1569-1575,
November 11, 1998). The JAMA articles
are available in full text through Ovid and the UIC library.
Readers wanting information about managed care will have no problem finding an overwhelming number of excellent sources. If the library or web is too time consuming or daunting, a readily accessible source may be as close as a stack of New England Journals on a near by shelf. The NEJM ran an excellent series of articles on managed care in 1998 and 1999. A good read and more references than you can possibly use (I have the titles and volume numbers); they are available through Ovid and the UIC library. Another favorite of mine is Paul Starr’s Pulitzer Prize winning book, The Social Transformation of American Medicine (Basic Books 1982). If you want a superb non-textbook account of the history of the American medical profession, get this one. It’s worth your time.
Mary Gibson, Editor
The
Managed Care Department, University of Illinois at Chicago, College of
Medicine, presents Managed Care
News online. Comments or requests should be addressed
to the editor at mgm@uic.edu.