Managed Care: A Comprehensive Care Technique for Quality Healthcare

Paper Type:  Essay
Pages:  6
Wordcount:  1565 Words
Date:  2023-01-16

Managed care is a care provision technique that incorporates management of quality of care and control of healthcare costs. Managed care depends on a comprehensive set of services for the integration of delivery and financing of suitable healthcare. The term is widely synonymous with the American healthcare system and as a result of the implementation of the Health Maintenance Organization Act of 1973. The managed care techniques were pioneered by health maintenance organizations (HMO) but later embraced by private health benefit programs. HMOs, give a range of services for a fixed pre-payment which is charged periodically. Therefore, managed care includes several types of organizations along with insurance options such as the preferred provider organizations (PPOs) which consists of hospital groups and physicians who would enter into a contract with the insurer or other groups to offer health care services to the covered people (Tobin, 1997). There is also the point of service plans (POSs) that bring together the PPOs and the HMO elements. A person gets to choose their preferred option at the time of service. Also, there is the fee for service plans or indemnity which integrate managed care and offer benefits using a predetermined amount of covered services. The brief management analysis of managed care will focus on its main elements with include health prevention initiatives, cost containment strategies, quality improvement, and population health focus.

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Health Prevention Initiatives

The changes in the healthcare system in the United States is an excellent opportunity for agencies in the department of public health to come up with prevention-oriented relationships with members of the private healthcare system. Examples of preventions include cancer screening, prenatal care, and immunization. The beneficiaries publicly funded care and employer-funded care are deriving significant benefit from managed care organizations (MCOs). One of the desirable features of MCOs is their focused efforts on defined populations with accountability on desired outcomes that include prevention initiatives. The relationship between managed care and prevention initiatives is many through HMOs. According to members of the CDC managed care working group (1998), HMOs can play an essential role in prevention initiatives in three ways.

First is that HMOs have been growing in popularity over the years, especially among the employer-funded and employer-funded care beneficiaries, Medicaid, and Medicare. The most significant increase in managed care has been witnessed in the health insurance financed by employers. Besides, there was a shift in health insurance from traditional fee for service to managed care plans that are less costly. It would be essential to note that States were concerned about the Medicaid beneficiaries' lack of access to primary care providers and their overreliance on emergency room care (Members of CDC Managed Care Working Group, 1998). States have managed to establish managed care programs by creating Section 1915(b) waiver that is freedom of choice and Section 1115 research and demonstration waivers. Section 1915 freedom of choice waivers is restricted geographically while the Section 1115 research and demonstration waivers are applicable statewide.

HMOs have been incorporating prevention measures along with development and maintenance of improving quality of service and measuring performance with the inclusion of preventive services. Seven out of the nine indicators of quality of service in Health Plan Employer Data and Information Set (HEDIS) version 2.5 are preventative. Prevention outcomes are some of the desired results that HMOs present as organized care of systems that have liability for defined populations. Many of the methods that were developed and provided by HMOs work towards the promotion and delivery of preventative services of relying on individual providers. Furthermore, HMOs are liable for the delivery of those services.

Cost Containment Strategies

Despite the changes implemented in the healthcare sector in the United States, rising healthcare costs remain a challenge, and any form of managed care strategy had incorporated some cost containment strategies to try and address the healthcare cost problem. The employers are in search of full medical benefits that come at a sustainable price for them. According to the National Business Group on Health, the Consumer Directed Health Plans (CDHP) is the primary cost containment strategy used in managed care. Most of the employers begin by replacing every other plan with CDHP for the beneficiaries to enjoy the full benefits of the cost management plan (Pritts, 2016).

It is common knowledge that the members of the public perceive cost management as the main objective of managed care. As a result, managed care had to present alternative routes to cost control. The managers could also opt to change MCOs management and spending decisions. They are exerting influence on the physician prescription patterns. Alternatively, stakeholders could opt to encourage economically efficient pharmacy procedures and policies and controlling the patient's access to prescription drugs (Schreter, 2000). Pharmacy policies have a significant impact on utilization and practice cost. That makes the pharmacy policies a target for the MCOs, which can reduce the expenses in the formularies. The downside is that the variations among the formularies are quite significant, and therefore no single type can be useful for all treatment programs. Other avenues include placing a limitation on physician practices, creating uniformity, and coming up with a high sense of accountability in healthcare.

Quality Improvement

In most cases, cost control has taken precedence over quality improvement when it comes to managed care. However, that doesn't mean that quality improvement isn't less of concern for the stakeholders. Policymakers have long been concerned about the quality of healthcare under the managed care system. According to Kongstvedt (2013), one of the main trends in managed care is the recognition of quality assurance and quality improvement mechanism as the tools for the buyers to make well-informed decisions. Formal programs for quality improvement and quality assurance are some of the common characteristics in managed care plans.

Practitioners initially believed that it was possible to improve the coordination of care as well as quality while increasing the emphasis they place on prevention. Quality improvement is of high priority in managed care, and advocates usually depend on managed behavioral health care for the development of quality of care for individuals with healthcare problems. The quality improvement in managed care has significantly benefited from the competition from enrollees as a result of premium subsidy that is structured to compel the employee to pay for the pre-premium costs above the cost of the lowest priced plan (Edmunds, 1997). Another aspect of quality of care is the mandate of the use of specific provider networks which limits the ability of consumers to choose practitioners hence reducing the number of providers that can be reimbursed for care (Edmunds, 1997). Furthermore, it facilitates contract negotiation at favorite rates and allows an increased level of scrutiny on the quality of care as compared to reimbursement of the individual practitioners for a fee for service.

Population Health Focus

Medicaid, along with public health agencies, are searching for new ways to address mutual health priorities by leveraging the tools, and the mechanisms in Medicaid managed care. Some of the new ways include holding the healthcare plans financially accountable for the performance on population health metrics ("Population Health and Managed Care"). Alternatively, they are working with managed care plans for the implementation of performance improvement projects that can meet the health outcome goals of the agencies. The Medicaid healthcare plans and the states are looking to offer rewards based on the value of care rather than the quantity services delivered by healthcare providers by focusing on population health improvement. The plans come up with the best practices that will promote population health via managed care vehicles as part of their value based reforms.


Prevention initiatives, cost containment strategies, quality improvement, and population health focus, form the pillars to managed care. These elements are related to each other in several ways to try and ensure an efficient healthcare system in the United States. However, so far, there have been mixed results, and it is arguable that the strategies are not working or at least not as they were supposed to. Healthcare continues to be a sensitive topic in the United States, especially in regards to rising costs. Managed care was primarily developed to help disadvantaged groups such as poor people. These groups are still unable to access quality, affordable healthcare. Even the middle class struggle to obtain the healthcare that they need. However, there is still considerable evidence to suggest that HMOs have reduced healthcare costs considerably, but in light of the recent events, involving rising costs of healthcare, these initiatives are not sufficient.References

Edmunds, M., (1997). Managing managed care: Quality improvement in behavioral health. Washington, D.C. National Academy Press.

Kongstvedt, P. R., (2013). Essentials of managed health care: Study guide (6th ed.). Burlington: Jones & Bartlett Learning.

Members of the CDC Managed Care Working Group. (1998, September 19). Prevention and Managed Care: Opportunities for Managed Care Organizations, Purchasers of Health Care, and Public Health Agencies. Retrieved May 30, 2019, from

Population Health and Managed Care. (n.d.). Retrieved May 31, 2019, from

Pritts, C., (2016, January 4). Cost containment strategies that can control your health care costs. Retrieved May 30, 2019, from

Schreter, R. K., (2000). Managed care cost-containment strategies and their impact on physician prescribing and treatment of depression. American Journal of Managed Care,6(2), S47-S52. Retrieved May 30, 2019, from

Tobin, C., (1997, January). What is Managed Healthcare? Retrieved May 29, 2019, from

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Managed Care: A Comprehensive Care Technique for Quality Healthcare. (2023, Jan 16). Retrieved from

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