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In the following, selection effects will be analyzed and possible solutions will be provided.
B. Main part:.
1. Managed Health Care, HMOs & capitation-based reimbursement:.
a) With managed health care, systems and techniques used to control the use of health care services are meant. Managed health care includes a review of medical necessity, incentives to use certain providers, and case management. It is the body of clinical, financial and organizational activities designed to ensure the provision of appropriate health care services in a cost-efficient manner.
b) Health maintenance organizations are institutions that provide private persons and employees with private health insurance. In general, they offer comprehensive health care from an established panel of providers by contracting with medical facilities, physicians and employers.
Problems with HMOs are as follows:.
• An HMO is usually a for-profit corporation with responsibilities to its stockholders that take precedence over its responsibilities to its insurees. The HMO directly and indirectly controls the amount of health care that the doctor is allowed to provide to the insuree. .
• Further, using the capitation-based reimbursement includes the jeopardy that health care providers lower the quality of care, since they get paid the same regardless of the service provided. Hence, HMO are supposed to establish increased regulation to counter these incentives.
• The plan-subscribers of an HMO are required to use participating or approved providers for all health services and generally all services will need to meet further approval by the HMO through its utilization program. Hence, HMOs are the most restrictive form of managed care benefit plans because they restrict the procedures, providers and benefits. .
Nevertheless, the use of HMOs has exploded in recent years. About 75 percent of American workers with health insurance are covered by HMOs.
