Assignment #1

Module 1: Assignment #1, Question #1

BUS 653

Assignment #1, Question #1

Assignment #1

Discuss how managed care activities by non-HMO health plans seek to constrain health care

costs and promote wellness.  

People that decide to choose a preferred provider organization (PPO) instead of the

traditional health maintenance organization (HMO) believe that PPO plans offer them more

flexibility and freedom when it comes to their healthcare needs, albeit at a higher cost typically

(Consumer Report, 2001). Managed care however places a limit that governs the type of care

people can receive. The backlash for managed care is simply due to people not wanting to be told

they can not go to any provider they want if they wish to receive full coverage. Non-HMO

health plans typically are less restrictive, however they still have some limits to the type of

treatments patients are able to receive as there is now a trend that managed care activities are

slightly blurring the lines between HMO and non-HMO health care plans by adding more

restrictions as they seek to constrain health care costs and promote wellness (Consumer Report,

2001).

A reported significant difference between HMO and non-HMO plans is the accessibility

and ease patients can see specialist doctors. Patients with HMO coverage on average had fewer

annual new specialist visits per member verses PPO patients (Barnett, Song, Bitton, & Landon,

2018). HMO plans are typically less expensive type of health coverage, but patients are assigned

to a primary care provider or “gatekeeper” that is responsible to refer patients in this plan to

specialists as required. With an HMO there is the potential that the referral is denied, or the

specialist is outside of the network which would mean the patient is responsible to pay for out of

network care out of pocket. With a PPO plan, patients may seek medical treatment from any

physician of their choosing with the main advantage being the flexibility offered by not requiring

referrals to see specialists (Barnett, Song, Bitton, & Landon, 2018).

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Many employers offer PPO’s as a health-care option for their employees as they benefit

since the fees, they pay insurers to administer PPOs are about half what they are for HMOs

(Consumer Report, 2001). Although PPOs are more flexible with their rules than with an HMO,

that doesn’t mean that they are necessarily better. Members pay higher premiums to be part of

the PPO and although the network of physicians is often much larger than an HMO and they can

refer themselves to physicians outside the network, they will have a higher copayment for this

service. Some employers want their PPOs to manage care as strictly as some HMOs do and

members encounter “gatekeepers” for referrals to specialist, while others do not monitor the level

or quality of care that the employees are receiving(Barnett, Song, Bitton, & Landon, 2018).

Therefore there has been a new shift in non-HMO plans that puts more constraint on the type of

care available to those who want the freedom and flexibility of choosing providers out of

network while still maintaining quality control (Barnett, Song, Bitton, & Landon, 2018).

It is extremely rare to find a health care plan that is non-managed or an indemnity plan.

Even though PPO plans are less restrictive, they still have a network of providers that offer

services whereas indemnity plans don’t have provider networks as they simply reimburse a

portion of covered medical services (Consumer Reports, 2014). Non-HMO plans attempt to

promote wellness by not limiting access to their patients. Non-HMO plans may require patients

to seek pre-authorization before receiving care, however this is to ensure that the treatment or

procedure is medically necessary. Health plans keep costs in check by making sure you really

need the services you are getting, even though Non-HMO plans do not require you to have a

PCP, the use of pre-authorization is a mechanism to ensure the health plan only pays for care that

is medically necessary (Consumer Reports, 2014).

Assignment #1

Consumers play a major role in helping to reduce out-of-control medical spending by

insisting on less pricey, but high-quality care and by staying informed on what type of insurance

plan would work best for them. If you are signed up for a non-HMO plan, and you choose to see

a provider outside of your network, you may have some out of pocket payments and pay a

greater portion of service charges vs. if you chose a provider within network. Very few people

take the time to review their insurance plans or learn how they can best help to reduce costs,

however knowing the list of network providers is one way to reduce out-of-control medical

spending by choosing a qualified network physician. Learning the language and terms when it

comes to medical coverage can help you navigate and select a provider that will offer the best

benefits for your needs. People that have a PPO managed care system receives the benefit of

getting discounted fees due to healthcare providers such as doctors and hospitals making an

agreement with insurance companies to offer substantially discounted fees to the member in

exchange for having a much larger group of patients to bill. The result is a trickle-down effect of

savings for the consumer.

Non-HMO plans not only seek to reduce costs, but they also want to pay for the services

that patients need. The benefit of being able to have a choice to see a specialist without having to

waste time and resources with a referral is one way that non-HMO plans reduces cost. In

addition, the focus is on quality care by having a large variety of network physicians for patients

to choose from. Non-HMO promotes wellness by not requiring you to maintain a primary care

physician unnecessarily acting as a gatekeeper and limiting patients to seek care from specialists

they feel they need. Patients have the freedom to choose care from providers outside of the

network, however this does mean that there will be an added expense, but at least the option is

there. Overall, I feel that non-HMO plans puts a focus on patients needs and quality of care.
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Reference:

Barnett, M. L., Song, Z., Bitton, A., Rose, S., & Landon, B. E. (2018). Gatekeeping and Patterns

of Outpatient Care Post Healthcare Reform. American Journal of Managed Care, 24(10),

e312–e318. Retrieved from https://search-ebscohost com.ezproxy.umary.edu/login.aspx?

direct=true&db=asn&AN=132341088&site=ehost live

HMO or PPO Are You in the right plan? (2001). Consumer Reports, 66(10), 27. Retrieved from

https://search-ebscohost com.ezproxy.umary.edu/login.aspx?

direct=true&db=asn&AN=5108899&site=ehost-live

Insurance Plans That Help Hold Down Costs: Our Picks. (2014). Consumer Reports, 79(11), 44

48. Retrieved from https://search-ebscohost com.ezproxy.umary.edu/login.aspx?

direct=true&db=asn&AN=98184099&site=ehostlive