Managed Care – Explored and Explained
This article will answer the questions: What is managed care? How many people are covered by managed care companies? Why is the Star Rating so important? How are Star Ratings Determined?
Read further for the answers. There are exceptions to every rule so it is impossible for me to explain special circumstances regarding managed care. These are the basics.
Managed Care – What is it?
To quote Wikipedia, the term managed care is used in the United States to describe a variety of techniques intended to reduce the cost of providing health benefits and improve the quality of care.
Managed Care is a healthcare delivery system with goals to manage medical costs, streamline healthcare utilization and maintain expected quality standards. A managed care organization (MCO) contracts with Medicare and Medicaid to provide for the delivery of health services. In exchange, the MCO receives a set per member per month (PMPM) payment called capitation.
By contracting with MCOs (also called Medicare or Medicaid Advantage Plans) to deliver Medicare and Medicaid health care services to their beneficiaries, states expect to reduce costs and better manage utilization of health services. Improvement in health plan performance, health care quality and outcomes are key objectives of managed care. A managed care company is graded by the state using a 5 Star Rating system.
How many people are covered by managed care companies?
To give you an idea of the magnitude of the healthcare industry, let's look at some numbers. BIG NUMBERS. These are not exact numbers but are near enough to give you an idea of the staggering number of beneficiaries and amounts of money spent on healthcare for these beneficiaries.
The US general population for 2016 is just over 322 million people and there are over 70 million people enrolled in Medicaid. Nearly 56 million are enrolled in a managed care plan. In 2014, healthcare costs for this population were in excess of $495 billion dollars. There are over 55 million people enrolled in Medicare. Nearly 17 million are enrolled in a managed care plan. In 2014, healthcare costs for this population were in excess of $618 billion dollars. In 2014, healthcare costs for private insurance companies topped $991 billion dollars. In December 2015, it was estimated the total healthcare costs in the US were in excess of three trillion dollars.
Mind-numbing numbers for sure. Look at it from a business standpoint – Three trillion dollars! No wonder managed care organizations are wooing beneficiaries away from their traditional Medicare and Medicaid.