What is Managed Care &
Why It's Not a Good Fit
WHAT IS MANAGED CARE?
Managed Care is a term used to describe a method of financing and delivering health care with the goal of lowering costs and improving the quality of care. It attempts to achieve these goals by focusing on the following techniques:
- Fixed, prepaid capitation rates - As a cost control measure, Managed Care Organizations (MCOs) have a set amount of money to pay for any and all service requests, or “claims,” for a given month. The capped amount of money is often based on an estimate of how much money was used in the past. This means that an MCO has a hard and finite amount of cash to pay for services each month, regardless of how many claims it receives. If/when the money runs out, MCOs don’t have an obligation to continue services.
- A closed network of providers - MCOs will decide upon specific standards of quality required for all providers. Then the MCO will choose, among the providers who meet those standards, which can offer services under their plan. By limiting the total number of providers in the network, it creates greater economies of scale (a smaller number of providers servicing the same population), with the idea that consistency in service will improve quality and reduce costs.
- Formal utilization review - Enrollees are required to get prior authorization from their MCO before receiving certain services. This is primarily a cost-saving tool used to avoid paying for unnecessary services.
- An emphasis on preventative care - Enrollees are encouraged to have regular “check ups” and other preventative care. The goal, based on a classic Medical Model approach, is to catch and cure medical issues in their early stages when treatment is the least expensive.
- Financial incentives to encourage enrollees to use care efficiently - In this model, providers may be given incentives to control costs or change how they work with specific populations to save money and improve quality.
WHY MANAGED CARE ISN'T A GOOD FIT FOR PEOPLE WITH I/DD
When one hears the term “managed care,” the first thing that comes to mind is likely HMOs (Health Maintenance Organizations). There’s a reason for that. Managed care was created by, and intended for, health insurance groups managing medical issues: things like rehabilitation after a fall, heart disease, diabetes, and other common reasons to visit a doctor.
Expertise with the medical model has given many MCO’s some success with keeping costs down while maintaining a standard of medical care. We all know that the medical model doesn’t work for people with intellectual and developmental disabilities (I/DD), it’s a square peg for a round hole. What about cost? Do the cost-savings measures MCO’s maintain the necessary quality services and supports people with I/DD need? In many cases, the answer is no. Let’s look again at the core principles of managed care and see how they impact people with I/DD:
- Fixed, prepaid capitation rates - Fixed capitation rates have had modest success in accurately predicting and reducing medical costs. But a recent report from the National Council on Disability, an independent federal agency cast doubts on its effectiveness for I/DD. It showed that states don’t have the data or measurement tools to accurately predict the costs of long-term services and supports as they’re administered now; let alone how they might be administered in the future. It’s tough to assign an appropriate lump sum dollar amount for services if you can’t predict the costs.
- A closed network of providers - Creating a closed list of limited providers has real implications for individuals with disabilities. First, fewer providers will be asked to serve more enrollees. While providers will be asked to do more with less, individuals with I/DD will feel the pinch. Meanwhile, consumer choice will be limited. Long-term services and supports are individualized services that can impact nearly every aspect of daily life. An ongoing relationship with a trusted provider is important. If your provider is not on the list or you don’t like the service provider you’re working with, under an MCO model, you may have few alternatives to choose from.
- Formal utilization review - Requiring prior authorization for services in a managed care system can make sense -- especially when you’re dealing with routine medical conditions. However, the needs of individuals with I/DD vary widely from person to person. A one-size-fits-all model simply can’t work, and often the people who authorize or deny services don’t have the expertise to make those decisions. Appealing denials will take time, and many individuals with I/DD may lack the support they need to successfully navigate this process.
- An emphasis on preventative care - Preventative care is a good thing. We all want to be as healthy as we can be and avoid major illness tomorrow by taking care of ourselves today. Managed care can make it easier for us to take care of our health. This system understands the medical model well -- you fix what’s broken and prevent it from breaking in the future. People with I/DD aren’t broken. They need to be part of a system that truly understands that and provides services and supports that make the community around them more accessible.
- Financial incentives to encourage enrollees to use care efficiently - Finally, incentivizing cost reduction can have some unintended consequences. While the goal is to find innovative approaches to provide better services at a lower cost, the reality can be devastating. The easiest way to control costs is to limit services, and long term services and supports is the most costly piece of Medicaid spending. Under a fixed, capitated model, MCOs have a finite amount of money to spend. What they don’t spend is used for other MCO priorities including profit or “reserves’. But it’s important to think long term about cost savings. Many long term services and supports for people with I/DD cost money upfront, but the savings will be recouped down the line. For example Early Intervention services have proven to lower the need for long term services but services for most people will still be needed. While many people can work with proper supports removing those supports can result in loss of employment. Good quality services designed in a person centered approach will allow individuals with IDD to live successful in communities but the supports will need to continue.
