A focus on quality improvement by managed care organizations

Customer-centric care takes hold. Measurement does little for quality improvement without comparative benchmarking. This is an important time for senior living and long term care providers. With increased regulatory mandates and the threat of shrinking reimbursement revenue, quality measurement—combined with comparative benchmarking—is one investment that is helping providers prepare for the future, gain peace of mind, and establish value in what is rapidly becoming a quality-focused health care landscape.

A focus on quality improvement by managed care organizations

Page 45 Share Cite Suggested Citation: Quality Improvement in Behavioral Health. The National Academies Press. Because of the demonstrations of cost savings, managed care has become more attractive to public agencies; for example, in32 percent of Medicaid recipients were enrolled in managed care plans HCFA, Managed behavioral health care companies have been among the fastest growing in the managed care sector.

Currently, 88 percent of the individuals in managed care and a total of million individuals are enrolled in a variety of managed behavioral health care products ranging from utilization review only to capitated carve-outs.

Carve-out vendors may be specialized units within larger managed care organizations or they may be independent companies. In the area of mental health, HMOs have typically been found to spend only 3 to 5 percent of their budgets on mental health, whereas spending for mental health care is 10 percent of the overall budget for the health care system in general Schadle and Christianson, These findings have led to concerns among consumers and family members about undertreatment, especially for individuals with serious and persistent mental illness Flynn et al.

Increasingly, advocates look to managed behavioral health care to improve the quality of care for individuals with behavioral health problems, and because increasing numbers of public-sector clients are being enrolled in carve-outs, quality improvement is a high priority.

Although it is intended for all mental health services and is not specific to managed behavioral health care, the report card involved industry groups in its development.

Field testing of the report card began in the summer of Employers as Purchasers As discussed in Chapter 1employers are interested in the value of their investments in health care.

They control the nature of competition among the health plans that are allowed to compete for a firm's employees and dependents. Control of competition occurs via the prequalification of plans, the initial negotiation of premiums, and the definitions of benefits and performance standards.

Employees are then permitted to choose among qualified health plans. In many cases the premium subsidy is structured so that the employee must pay for pre- Page 46 Share Cite Suggested Citation: This competition for enrollees is thought to exert pressure to reduce premiums and to offer the opportunity to compete in the area of quality as well.

In addition, the increased use of capitated payment methods for reimbursing health plans creates strong financial incentives for plans to reduce health care spending.

Capitation refers to the practice of having fixed rates of payment for the provision of a specified group of services to a defined group of recipients.

Usually, payment is made on a per-member, per-month basis. Although it is not the dominant payment method, the use of capitation to create incentives for providers and practitioners has expanded. It is estimated that in about 20 percent of the population was served by a physician who was reimbursed under a capitation arrangement Business and Health Magazine, This passes the strong financial incentives of capitation along to individual providers of care.

Report cards and public reporting of responses to patient satisfaction surveys provide opportunities for employers and employees to choose among competing health plans by comparing the relative value offered by various plans.

The result of the combination of aggressive buying by employers and the use of competition has been a dramatic shift in enrollment patterns across plan types. Recent surveys by several large benefits consulting firms indicate that the portion of individuals covered by employer-sponsored insurance and enrolled in traditional indemnity plans with or without precertification fell from 53 percent in to 35 percent in In addition, some employers report that they have been successful in obtaining premium reductions from health plans seeking to participate in their employee health programs.

The overall result has been for average employee health care costs to rise only modestly among larger employers, whereas the increases in costs for other purchasers have been larger IOM, Financial incentives, provider selection, and utilization management techniques are used alone and in combination within most managed care plans Freeman and Trabin, ; Goplerud, ; IOM, Financial incentives can be applied to consumers deductibles and copayments and providers capitation or some other form of risk-based contracting to discourage the use of costly services.


Mandating the use of specific provider networks limits consumers' ability to choose practitioners, reduces the number of providers that can be reimbursed for care, facilitates the negotiation of contracts with favorable rates, and permits more scrutiny of the quality of care than reimbursing individual practitioners on a fee-for-service basis.

Finally, utilization management applies treatment guidelines, protocols, and professional judgment through prior review are services appropriate and necessary?

Page 47 Share Cite Suggested Citation: The configurations and structural relationships among the Medicaid agency, state mental health and substance abuse authorities, and child welfare systems are different in each state, as are the economic and political environments, so the routes to cost-effective care differ in each state Essock and Goldman, By August of29 states had received federal waivers to restructure their Medicaid programs, often in response to state legislative mandates to expand coverage for poor people who would otherwise not qualify for Medicaid GAO, Expansion of the numbers of people enrolled in the Medicaid program requires the realization of savings from care for currently covered enrollees to finance the expansion of coverage to new populations.

One way to achieve the savings is through capitated health plans. As of Juneabout 32 percent of Medicaid program beneficiaries were enrolled in capitated managed health care plans HCFA, This segment of the Medicaid market is growing rapidly.

States are active buyers of managed care services for their Medicaid enrollees and make use of competition to enter the program to obtain favorable premiums. Because Medicaid enrollees do not pay premiums, competition for enrollees is used primarily as a quality control mechanism.Start studying Fordney chapter Learn vocabulary, terms, and more with flashcards, games, and other study tools.

Search. in a managed care setting, a physician who controls patient access to specialists and diagnostic testing services is known as a quality improvement organization determines the quality and operation of health care.

Managing Managed Care: Quality Improvement in Behavioral Health. Washington, DC: The National Academies Press. doi: / The response to the new strategies in purchasing health care has been an acceleration in the growth of managed care organizations.

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Managed care imposes organization, controls, quality measurement, and. NCQA requires that managed care organizations have a written QM plan that has been approved by governing board These people are ultimately responsible for the organization, have a commitment to quality, established priorities, incorporate findings into strategic plan, funding, education.

Managed care imposes organization, controls, quality measurement, and accountability on the delivery of health care to achieve the purchaser's goals for access to care, quality of care, effectiveness of care, and cost of care (Goldstein, ; Mechanic et al., ; Miller and Luft, ; Wells et al., ).

Understanding Quality Measurement.

A focus on quality improvement by managed care organizations

Child Health Care Quality Toolbox. Managed care organization (MCO). Health plan or program. Hospital. questions require additional investigation and may serve as the starting point for program management initiatives or quality improvement efforts.

A focus on quality improvement by managed care organizations

The role of performance measures for improving quality in managed care organizations. D P Scanlon, C Darby, E Rolph, and H E Doty The Pennsylvania State University, Department of Health Policy and Administration, and Center for Health Policy Research, University Park , USA.

A focus on quality improvement by managed care organizations