9780834218628

About the Editor

xvii

Contributors

xviii

Preface

xxi

Acknowledgments

xxvii

PART I---INTRODUCTION TO MANAGED CARE

(82)

An Overview of Managed Care

(14)

Peter D. Fox

Study Objectives

(1)

Introduction

(1)

Managed Care: The Early Years (Pre-1970)

(1)

The Adolescent Years: 1970-1985

(4)

Managed Care Comes of Age: 1985 to the Present

(4)

Future Issues Facing Managed Care

(2)

Conclusion

(1)

Study Questions

(2)

Types of Managed Care Organizations

(14)

Eric R. Wagner

Study Objectives

(2)

Types of MCOs

(4)

HMO Models

(7)

Conclusion

(1)

Study Questions

(1)

Integrated Health Care Delivery Systems

(32)

Peter R. Kongstvedt

David W. Plocher

Jean C. Stanford

Study Objectives

(1)

Introduction

(2)

Highly Integrated Delivery Systems

(1)

Market Characteristics

(1)

Types of IDSs

(1)

IPAs

(1)

PPMCs

(4)

Consolidated Medical Groups

(1)

PHOs

(4)

MSOs

(1)

Foundations

(2)

Staff Model

(1)

Physician Ownership Model

(1)

PSOs

(2)

Virtual Integration

(1)

Global Capitation

(2)

Acquisition of Physician Practices

(1)

Legal Pitfalls for IDSs

(2)

Critical Success Factors for IDSs

(3)

Conclusion

(1)

Study Questions

(2)

Elements of the Management Control and Governance Structure

(8)

Peter R. Kongstvedt

Study Objectives

(1)

Board of Directors

(3)

Key Management Positions

(2)

Committees

(2)

Management Control Structure

(1)

Conclusion

(1)

Study Questions

(1)

Examining Common Assertions About Managed Care

(12)

Richard I. Smith

Daniel Thornton

Terry Sollom

Study Objectives

(1)

Introduction

(1)

Managed Care Myths

(7)

Conclusion

(1)

Study Questions

(4)

PART II---THE HEALTH CARE DELIVERY SYSTEM

(94)

Primary Care in Managed Health Care Plans

(18)

Peter R. Kongstvedt

Study Objectives

(1)

Introduction and Definitions

(1)

Recruiting

(2)

Nonphysician or Midlevel Practitioners

(1)

Types of Contracting Situations

(3)

Credentialing

(2)

The National Practitioner Data Bank

(1)

Healthcare Integrity and Protection Data Bank

(2)

Compensation

(1)

Orientation

(1)

Network Maintenance

(2)

Internet-Based Activities

(1)

Removing Physicians from the Network

100

(1)

Conclusion

101

(1)

Study Questions

101

(2)

Compensation of Primary Care Physicians in Managed Health Care

103

(38)

Peter R. Kongstvedt

Study Objectives

103

(1)

Introduction

103

(1)

Basic Models of Reimbursement

104

(2)

Capitation

106

(4)

Withholds and Risk/Bonus Arrangements

110

(1)

Capitation Pools for Referral and Institutional Services

111

(6)

Full Professional Risk Capitation

117

(1)

Reasons To Capitate

118

(1)

Problems with Capitation Systems

118

(2)

Effect of Benefits Design on Reimbursement

120

(3)

Fee for Service

123

(2)

A Special Requirement for Reimbursement When Coinsurance Is in Place

125

(1)

Out-of-Network Fees

125

(1)

Discounts, Negotiated Fee Schedules, Fee Maximums, or Fee Allowances

126

(1)

Relative Value Scales

126

(1)

Global Fees

127

(3)

Problems with FFS in Managed Health Care Plans

130

(1)

Legislation and Regulation Applicable to Physician Incentive Programs

131

(5)

Civil Liability in Physician Compensation Programs

136

(1)

Conclusion

137

(1)

Study Questions

138

(3)

Contracting and Reimbursement of Specialty Physicians

141

(16)

Peter R. Kongstvedt

Study Objectives

141

(1)

Introduction

141

(1)

How Many Specialty Care Physicians?

142

(1)

Primary versus Specialty Care Designation

143

(1)

Credentialing

144

(1)

Types of Reimbursement Arrangements

144

(6)

Organizational Models for Capitating Specialty Services

150

(2)

Common Problems with Specialty Capitation

152

(2)

Other Forms of Specialty Physician Reimbursement

154

(1)

Risk and Reward

155

(1)

Conclusion

155

(1)

Study Questions

156

(1)

Negotiating and Contracting With Hospitals, Institutions, and Ancillary Services

157

(20)

Peter R. Kongstvedt

Study Objectives

157

(1)

Introduction

157

(1)

Hospital Network Development

157

(5)

Types of Reimbursement Arrangements

162

(8)

Outpatient Procedures

170

(1)

Ancillary Services

171

(4)

Conclusion

175

(1)

Study Questions

175

(2)

PART III---MEDICAL MANAGEMENT

177

(262)

Care Management and Clinical Integration Components

179

(18)

David W. Plocher

Wendy L. Wilson

Jacqueline A. Lutz

Ann Huston

Study Objectives

179

(1)

The Context for Advanced Care Management

179

(2)

Defining Advanced Care Management

181

(1)

Integrating the Components of Care Management

182

(3)

The Role of Physicians in Care Management

185

(1)

Building an Advanced Care Management System: A Typical Process

185

(5)

Defining the Future State of Care Management

190

(2)

Conclusion

192

(1)

Study Questions

193

(4)

Description of the Components of the Advanced Care Management System

194

(3)

Managing Basic Medical-Surgical Utilization

197

(38)

Peter R. Kongstvedt

Study Objectives

197

(1)

Introduction

197

(1)

Return on Investment in Management of Medical Costs

198

(1)

Demand Management

198

(4)

Measurements of Utilization

202

(3)

Variations in Utilization

205

(3)

The Role of Electronic Commerce

208

(1)

Authorization or Denial of Payment for Services

208

(1)

Managing Utilization of Specialty Services

209

(2)

The Role of the Primary Care Physician in Specialty Services Management

211

(1)

Single Visit Authorizations Only

212

(1)

Specialty Physicians As Primary Physicians

213

(1)

Prohibition of Secondary Referrals and Authorizations

214

(1)

Review of Reasons for Referral

215

(2)

Institutional Utilization Management

217

(1)

Common Methods for Managing Utilization

217

(10)

Alternatives to Acute Care Hospitalization

227

(3)

Case Management

230

(1)

Conclusion

230

(1)

Study Questions

231

(4)

Clinical Services Requiring Authorization

235

(14)

Peter R. Kongstvedt

Study Objectives

235

(1)

Definition of Services Requiring Authorization

236

(1)

Definition of Who Can Authorize Services

236

(2)

Claims Payment

238

(1)

Categories of Authorization

239

(2)

Staffing

241

(1)

Common Data Elements

242

(1)

Methods of Data Capture and Authorization Issuance

243

(2)

Authorization System Reports

245

(1)

Open Access HMOs

246

(1)

Specialty-Physician Based Authorization Systems

246

(1)

Non-Physician-Based Authorization Systems

247

(1)

Conclusion

247

(1)

Study Questions

247

(2)

Case Management and Managed Care

249

(32)

Catherine M. Mullahy

Study Objectives

249

(1)

The Case Manager's Role

249

(1)

Patient Profile: Not Every Case Needs a Case Manager

250

(2)

On-Site versus Telephone-Based Case Management

252

(1)

Case Managers in Managed Care

253

(1)

Case Management Work Format and Process

254

(9)

Utilization Review: Preadmission and Concurrent Review and Case Management

263

(1)

Preadmission and Concurrent Review Case Management Reports

264

(1)

Red Flags: Indicators for Case Management

264

(7)

Timing Case Management Intervention

271

(4)

Beyond the Case Management Basics

275

(3)

A Long-Term Solution to a Long-Term Problem

278

(1)

Study Questions

278

(3)

Fundamentals and Core Competencies of Disease Management

281

(12)

David W. Plocher

Study Objectives

281

(1)

Definition and Clarification

281

(3)

Barriers and Drivers for Disease Management

284

(1)

Business Plan

285

(1)

Survey of Disease Management Programs

285

(2)

Important Linkages

287

(1)

Support from Electronic Commerce

287

(4)

Conclusion

291

(1)

Study Questions

291

(2)

Prescription Drug Benefits in Managed Care

293

(39)

Robert P. Navarro

Study Objectives

293

(1)

Financial Basis for Pharmacy Benefit Management

294

(3)

Pharmacy Program Cost Components

297

(1)

Principles of Pharmacy Benefit Management

298

(1)

Managing the Supply and Demand

299

(1)

Pharmacy Information Systems and Health Informatics

299

(5)

Pharmacy Benefit Management Companies (PBMs)

304

(3)

Pharmacy Benefit Management Program Components

307

(2)

Physician Provider Network

309

(1)

Pharmacy Provider Network

309

(4)

Pharmacy Provider Audits

313

(1)

Drug Formulary Management

313

(6)

Pharmaceutical Manufacturer Discount and Rebate Contracts

319

(1)

Prescription Patient Copayments

320

(4)

Role of Pharmacy Programs in Disease Management and Quality Improvement Programs

324

(1)

Quality Improvement in Pharmacy Benefit Management

325

(1)

Measuring Pharmacy Benefit Management Program Performance

325

(2)

Future Changes in Pharmacy Benefit Management

327

(1)

Conclusion

328

(1)

Study Questions

328

(4)

Managed Behavioral Health Care and Chemical Dependency Services

332

(29)

Donald F. Anderson

Jeffrey L. Berlant

Katherine O. Sternbach

Danna Mauch

H.G. Whittington

William R. Maloney

Terri Goens

Study Objectives

332

(1)

Introduction

333

(1)

Historical Perspective

333

(4)

Key Treatment Principles

337

(5)

Benefit Plan Design

342

(3)

Utilization Management

345

(1)

Channeling Mechanisms

346

(2)

Provider Structures for Integrated Delivery Systems To Meet Managed Care Objectives

348

(2)

Quality Assurance

350

(4)

BH Information Systems

354

(3)

Public/Private Systems Integration

357

(1)

Emerging Issues

358

(1)

Conclusion

359

(1)

Study Questions

359

(2)

Quality Management in Managed Care

361

(18)

Pamela B. Siren

Study Objectives

361

(1)

Introduction

361

(1)

Traditional Quality Assurance

362

(3)

Components of a Quality Management Program

365

(1)

A Process Model for a Modern Quality Management Program

366

(10)

Conclusion

376

(1)

Study Questions

377

(2)

Using Data and Provider Profiling in Medical Management

379

(40)

Peter R. Kongstvedt

Norbert I. Goldfield

David W. Plocher

Study Objectives

379

(1)

Introduction

379

(1)

Use of Data and Information in Medical Management

380

(4)

Patient Data Confidentiality

384

(1)

Data Elements and the Application of Reports

385

(6)

General Types of Reports

391

(4)

Provider Profiling

395

(2)

Desired Characteristics of Provider Profiles

397

(3)

The Need To Adjust for Severity of Illness

400

(9)

Selection of a Profiling Vendor

409

(5)

The Future of Data Use

414

(2)

Conclusion

416

(1)

Study Questions

416

(3)

Physician Behavior Change in Managed Health Care

419

(20)

Peter R. Kongstvedt

Study Objectives

419

(1)

Introduction

419

(1)

General Aspects of Physician Practice Behavior

420

(7)

General Approaches to Changing Behavior

427

(2)

Programmatic Approaches to Changing Physician Behavior

429

(2)

Addressing Noncompliance by Individual Physicians

431

(3)

Conclusion

434

(1)

Study Questions

435

(4)

PART IV---OPERATIONAL MARKETING AND MANAGEMENT

439

(216)

Information Systems in Managed Health Care Plans

441

(20)

James S. Slubowski

Study Objectives

441

(1)

Introduction

441

(1)

Core Managed Care Information System

442

(4)

Electronic Data Interchange

446

(2)

Privacy and Confidentiality under HIPAA

448

(1)

Value-Added Services---The Next Generation

448

(6)

HEDIS

454

(1)

Information Services Department

455

(4)

Conclusion

459

(1)

Study Questions

460

(1)

Claims and Benefits Administration

461

(46)

Robin L. McElfatrick

Robert S. Eichler

Study Objectives

461

(1)

Introduction

462

(1)

Claims: Positioning, Purpose, and Opportunities

462

(3)

Organizational Structure and Staffing

465

(5)

Claims Operations Management

470

(10)

Productivity

480

(2)

Turn Around Time

482

(2)

Staff Training and Development

484

(2)

Quality

486

(2)

Policy and Procedure

488

(3)

Coordination with Other Departments/Functions

491

(1)

Systems Support

491

(4)

Claims Business Functions

495

(7)

Other Issues

502

(4)

Conclusion

506

(1)

Study Questions

506

(1)

Member Services and Consumer Affairs

507

(28)

Peter R. Kongstvedt

Study Objectives

507

(1)

Provision of General Information

508

(25)

Conclusion

533

(1)

Study Questions

533

(2)

Sales and Marketing in Managed Health Care Plans: The Process of Distribution

535

(20)

Gail Marcus

John C. Thomson

Study Objectives

535

(1)

What Managed Care Organizations Deliver

535

(2)

Challenges Facing MCOs

537

(4)

An Overview of the Managed Care Market

541

(1)

Key Decision Makers and Influencers in the Managed Care Distribution Process

541

(5)

The Managed Care Sales Process

546

(3)

How the Managed Care Team Delivers

549

(3)

The Management of Sales and Marketing Professionals

552

(1)

Conclusion

553

(1)

Study Questions

554

(1)

The Employer's View of Managed Health Care: Show Me the Value

555

(11)

Michael J. Taylor

Study Objectives

555

(1)

Recent Managed Care Trends Affecting Employers

555

(1)

How These Trends Impact Employers Both Large and Small

556

(1)

The Large Group Employer: 5,000 Lives Plus

557

(1)

The Moderate Group Employer: 500-5,000 Lives

557

(1)

The Medium Group Employer: 50-500 Lives

558

(1)

The Small Group Employer: 0-50 Lives

558

(1)

How Employers Purchase Value (1988-1998)

559

(2)

Looking for Value: 2000 and Beyond

561

(1)

Future Trends

562

(2)

Conclusion

564

(1)

Study Questions

565

(1)

The Impact of Consumerism on Managed Health Care

566

(21)

Jacqueline A. Lutz

Hindy J. Shaman

Study Objectives

566

(1)

Why Is Consumerism a Significant Trend?

567

(6)

Who Is the New Health Care Consumer?

573

(1)

What Are the Implications of Consumerism?

574

(10)

How Can Organizations Develop a Consumer Strategy?

584

(1)

What Consumerism Means for the Managed Care Industry

584

(1)

Conclusion

585

(1)

Study Questions

585

(2)

Accreditation and Performance Measurement Programs for Managed Care Organizations

587

(22)

Margaret E. O'Kane

Study Objectives

587

(1)

Introduction

587

(2)

Oversight by Type of Organization

589

(1)

National Committee for Quality Assurance

589

(11)

The Utilization Review Accreditation Commission

600

(3)

Joint Commission on Accreditation of Healthcare Organizations

603

(5)

Conclusion

608

(1)

Study Questions

608

(1)

Common Operational Problems in Managed Health Care Plans

609

(19)

Peter R. Kongstvedt

Study Objectives

609

(1)

Introduction and Background

609

(2)

Common versus Unique Problems or Events

611

(1)

Common Problems in Managed Care Organizations

611

(15)

Conclusion

626

(1)

Study Questions

627

(1)

Operational Finance and Budgeting

628

(15)

Dale F. Harding

Study Objectives

628

(1)

Background

629

(1)

Financial Statement Components

630

(6)

Balance Sheet

636

(2)

Regulatory Reporting Considerations

638

(2)

Budgeting and Financial Forecasting

640

(2)

Conclusion

642

(1)

Study Questions

642

(1)

Underwriting and Rating Functions Common to Most Markets

643

(12)

Stephen M. Cigich

Michael G. Sturm

Study Objectives

643

(1)

Underwriting

644

(1)

Rating

645

(8)

Conclusion

653

(1)

Study Questions

653

(2)

PART V---MEDICARE AND MEDICAID

655

(48)

Medicare and Managed Care

657

(27)

Carlos Zarabozo

Jean D. LeMasurier

Study Objectives

657

(1)

Introduction

657

(1)

Organization of the Chapter

658

(1)

Who Is Eligible for a Medicare Risk Contract?

658

(1)

The Exception in State Licensure: Provider-Sponsored Organizations

659

(1)

Other New Options

660

(2)

Muddying the Waters: Plans versus Organizations

662

(8)

Federal Preemption

670

(1)

What the Contract Requires (Finally!)

670

(3)

Limitations on Physician Incentive Plans

673

(1)

Consumer Protections

673

(2)

Provider Protections and Rights: Conscience Protection

675

(1)

Information Dissemination

675

(1)

Enrollment

676

(2)

Marketing Rules

678

(1)

Interactions with Your Government

679

(1)

The Contracting Process

679

(1)

Web Resources and Other Contacts

680

(1)

Future Direction of the Program

681

(1)

Study Questions

682

(2)

Medicaid Managed Care

684

(19)

Robert E. Hurley

Stephen A. Somers

Study Objectives

684

(1)

Introduction

684

(1)

Medicaid---Origins and Evolution

685

(1)

Medicaid Managed Care---Background and Models

686

(2)

Operational Features

688

(5)

Successes of Medicaid Managed Care

693

(3)

Shortfalls of Medicaid Managed Care

696

(2)

The Challenging Contemporary Context

698

(1)

Longer Term Questions and Concerns

699

(2)

Conclusion

701

(1)

Study Questions

701

(2)

PART VI---REGULATORY AND LEGAL ISSUES

703

(119)

Legal Issues in Provider Contracting

705

(38)

Mark S. Joffe

Study Objectives

705

(1)

General Issues in Contracting

706

(1)

Contract Structure

707

(1)

Common Clauses, Provisions, and Key Factors

708

(13)

Conclusion

721

(1)

Study Questions

721

(22)

Sample Physician Agreement

722

(12)

Sample Hospital Agreement

734

(9)

Legal Liability Related to Medical Management Activities

743

(21)

James L. Touse

Study Objectives

743

(1)

Obligations To Conduct Medical Management Activities

744

(1)

Common Law Medical Management Liability Actions

745

(1)

Contract Actions Related to Medical Management Activities

746

(5)

Negligence Actions Related to Medical Management Activities

751

(7)

Recommendations

758

(3)

Conclusion

761

(1)

Study Questions

762

(2)

The Health Insurance Portability and Accountability Act of 1996

764

(22)

Charles N. Kahn III

Dean A. Rosen

Marianne Miller

Kathleen H. Fyffe

Study Objectives

764

(1)

Introduction

764

(1)

Overview

765

(1)

Provisions: Portability and Access

766

(6)

New Access Initiatives

772

(2)

Amendments to HIPAA Portability and Access Provisions

774

(1)

Provisions: Administrative Simplification

775

(3)

HIPAA Administration and Enforcement

778

(2)

An Early Report on the Effects of HIPAA Portability and Access Provisions

780

(3)

Conclusion

783

(1)

Study Questions

784

(2)

State Regulation of Managed Care

786

(24)

Richard I. Smith

Kristin Stewart

Study Objectives

786

(1)

Introduction

786

(1)

State Oversight: The Regulatory Process

787

(8)

State Regulation of Other Products

795

(3)

Managed Care Legislation

798

(7)

Regulation by Market Segment

805

(2)

The State Experience---Conclusion

807

(1)

Study Questions

807

(3)

Managed Care's Regulatory Evolution: Driving Change in the New Century

810

(12)

Frederick B. Abbey

Study Objectives

810

(1)

Forces Driving Federal Health Policy

811

(3)

Major Areas of Policy Development

814

(6)

Outlook

820

(1)

Study Questions

821

(1)

EPILOGUE---MANAGED HEALTH CARE AT THE MILLENNIUM

822

(11)

Peter R. Kongstvedt

Introduction---The Rollercoaster That Never Stops

822

(1)

Using the Magic Eight Ball: The Answer Is Hazy---Try Again Later

823

(1)

They Were Right All Along---Managed Health Care Is in Chaos

823

(2)

Reversing Entropy with a Little Help from Professor Heisenberg---Predicting, Leading, and Acting in a Chaotic Managed Health Care Environment

825

(1)

Handicapping the Field---The Stratification of Predictability

826

(3)

Driving the Nitroglycerine Truck on a Foggy Night---Leadership, Strategy, and Action in the Chaotic World

829

(2)

Door Number One, Two, or Three---Choosing Strategic Options

831

(1)

Conclusion---Shake the Magic Eight Ball and Try Again

832

(1)

Glossary of Terms and Acronyms

833

(22)

Index

855

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Essentials of Managed Health Care

0834218623

Summary

Table of Contents

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