MANAGED CARE AND IT
IMPACT ON HEALTH CARE
HEED 3330
MODULE 5
DR. GREEN

WHAT IS MANAGED CARE?
• Managed care is the cost management of health care services utilization by controlling the health care
provider that the patient sees as well as how much the services cost.
• Managed Care Plans
• Establish relationships with organizations and providers to provide a designated set of services to their
members
• Establish criteria for their members to utilize the MCO
• Establish measures to estimate cost control
• Provide incentives to encourage health service resources
• Provide and encourage utilization of programs to improve the health status of their enrollees

MANAGED CARE MODELS
• Health Maintenance Organizations (HMOs): The HMOs are the oldest type of managed care. Members must
see their primary care provider first in order to see a specialist.
• The Network model is similar to the Group model but these providers may see other patients who are not
members of the HMO.
• The Independent Practice Associations (IPA) contracts with a group of physicians who are in private practice
to see MCO members at a prepaid rate per visit. The physicians may sign contracts with many HMOs.
• Preferred Provider Organizations (PPOs):
• Do not have a gatekeeper like the HMO so a member does not need a referral to see a specialist
• Do not have a copay but a deductible
• Developed by providers and hospitals to ensure that non members could still be served while providing a discount to
MCOs for their members
• Exclusive Provider Organizations (EOP): They are similar to PPOs but they restrict members to the list of
preferred or exclusive providers members can use.
• Physician Hospital Organizations (PHO): These organizations include physician hospitals, surgical centers, and
other medical providers that contract with a managed care plan to provide health services.
• Parvanta, C. F., Nelson, D. E., & Harner, R. N. (2018). Public health communication: Critical tools and strategies. Burlington, MA: Jones and Bartlett.

COST CONTROL MEASURES OF MCOS
• Restriction on Provider choice: Members of an MCO often have restrictions on their choice for a provider.
• Gate keeping: In some MCOs, the primary care provider is the gatekeeper of all of the care for the patient
member. Any secondary or tertiary care would be coordinated by the gatekeeper.
• Utilization review evaluates the appropriateness of the types of services provided. There are three types of
utilization reviews: prospective, concurrent, and retrospective.
• Prospective utilization review is implemented before the service is actually performed by having the
procedure authorized by the MCO based on clinical guidelines.
• Concurrent utilization reviews are decisions that are made during the actual course of service such as length
of inpatient stay or additional surgery.
• Retrospective utilization review is an evaluation of services once the services have been provided. This may
occur to assess treatment patterns of certain diseases.
• Parvanta, C. F., Nelson, D. E., & Harner, R. N. (2018). Public health communication: Critical tools and strategies. Burlington, MA: Jones and Bartlett.

ISSUES WITH MCOS
• Physicians who contract with several MCOs are concerned with providing quality care to their patients
because the MCO’s focus is on cost.
• As a result of their focus on cost, the physician’s ability to practice without close monitoring of their
healthcare choices can be limited.
• Surveys indicate that the more managed care networks the physician contracts, the less satisfied they
are with managed care.
• Physicians are also concerned with physician network rentals or silent PPOs which are unauthorized
third parties outside the contract between the MCO and the physician that gain access to the MCO
discount rates.
• Examples of these network rentals are automobile insurers or workmen’s compensations insurers. They
obtain the physician’s rates from a database.
• The main insurer who has the contract with the physician does not provide the information to the
physician and the third parties continue to benefit from the discounted rates. There are several states
that prohibit these silent PPOs.
• Parvanta, C. F., Nelson, D. E., & Harner, R. N. (2018). Public health communication: Critical tools and strategies. Burlington, MA: Jones and Bartlett.

WHAT IS HEALTH INFORMATION TECHNOLOGY?
• The general term of informatics refers to the science of computer application to data in different industries.
• Health or medical informatics is the science of computer application that supports clinical and research data
in different areas of health care.
• Health information systems are systems that store, transmit, collect, and retrieve these data.
• Health information technology’s (HIT) goal is to manage the health data that can be used by
patients/consumers, insurance companies, health care providers, healthcare administrators, and any
stakeholder that has an interest in health care.
• Parvanta, C. F., Nelson, D. E., & Harner, R. N. (2018). Public health communication: Critical tools and strategies. Burlington, MA: Jones and Bartlett.

ELECTRONIC HEALTH VS. ELECTRONIC MEDICAL
RECORDS
• The National Alliance for Health Information Technology (NAHIT) defines the electronic medical record
(EMR) as the electronic record of health-related information on an individual that is accumulated from one
health system and is utilized by the health organization that is providing patient care while the electronic
health record (EHR) accumulates more patient medical information from many health organizations that have
been involved in the patient care which can be shared with other sites.
• According to DHHS, the Health Information Technology for Economic and Clinical Health (HITECH) Act, which
was enacted as part of the 2009 American Recovery and Reinvestment Act, was designed to stimulate the
adoption of health information technology in the United States.
• The Office of the National Coordinator (ONC) for Health Information Technologyis responsible for
implementing the incentives and penalties program.
• The ONC has been working to create “meaningful use” guidelines for physicians and others that will help
them receive incentive payments and avoid penalties in the future.
• Parvanta, C. F., Nelson, D. E., & Harner, R. N. (2018). Public health communication: Critical tools and strategies. Burlington, MA: Jones and Bartlett.

BENEFITS OF EHRS
• Increased comprehensive reporting that integrated both clinical and administrative data.
• Provides an opportunity to analyze and review patient outcomes because of the standardization of the
clinical assessments.
• Development of electronic automated reports that improved the discharge of a patient.
• The EHR also improved operational efficiency.
• Computerized documentation took 30% less time than the previous handwritten notes.
• Provides aggregate data in the patient records to other departments and the information about the
patient was legible.

ISSUES WITH EHRS
• The cost of implementing the system.
• Data standards that should be used nationally.
• Adequate training is required for both healthcare professionals and staff to fully utilize the system.
• Uniform adoption of the EHR system by all participants.

LEGAL AND ETHICAL ISSUES
• Legal and ethical issues are also a concern. As with any technological development, regulations often
lag behind its implementation.
• A major legal barrier is the sharing of the patient information electronically with other providers.
• Does this violate any HIPAA regulations pertaining to privacy and confidentiality?
• Does the patient have to consent this sharing of information each time their information is
electronically shared with other providers.
• Parvanta, C. F., Nelson, D. E., & Harner, R. N. (2018). Public health communication: Critical tools and strategies. Burlington, MA: Jones and Bartlett.

TELEHEALTH AND TELEMEDICINE
• Telehealth is the broad term that encompasses the use of IT to deliver education, research, and clinical
care.
• An important activity of telehealth is the use of email between providers and their patients.
• E-health refers to the use of the Internet by both individuals and healthcare professionals to access
education, research, products, and services. There are several websites such as www.webmd.com and
www.healthline.com that provide consumers general healthcare information.
• Telemedicine refers to the use of IT to enable healthcare providers to communicate with rural care
providers regarding patient care or to communicate directly with patients regarding treatment.
• The basic form of telemedicine is a telephone consultation. There are growing IT applications for
telemedicine, including smart phones, video conferencing, and email.
• Parvanta, C. F., Nelson, D. E., & Harner, R. N. (2018). Public health communication: Critical tools and strategies. Burlington, MA: Jones and Bartlett.