Assignment: Degree of Control
managing costs is going to be the individual consumer. When people are spending their own money, given good and actionable information, they’re going to do much better at controlling costs than the current model” (Rauber 2003). From July 2001, when Humana replaced its traditional coverage with consumer-driven coverage for its Louisville-area employees and their dependents, through June 2002, Humana saved more than $2 million from its anticipated health benefits’ costs.
To manage increased risk, MCOs contain costs with aggressive methods of controlling utilization that include carefully selecting subscribers and providers, providing physician incentives, and providing subscriber/employer incentives. Eastaugh (1992) reported that HMOs, the most aggressive form of MCOs, used 37 percent fewer hospital days (341 days per 1,000 enrolled) for their nonelderly enrolled populations than commercial indemnity plans, which used 542 days per 1,000 enrolled.
Historically, MCOs have been classified on the basis of the degree of control they have over their physician providers. Point-of-service (POS) plans are MCOs that exert minimal to no control over their physician providers because they allow enrollees to seek care from providers not on contract with the POS plans (i.e., out of network). Although POS plans reimburse the provider’s fees, the POS plan usually requires the enrollee to pay out-of-network providers larger deductibles and coinsurance, as well as higher premiums to the POS plan, for the privilege of going out of network.
In 2016, the Kaiser Family Foundation reported that POS plans represent about 8 percent of all covered workers, while PPOs represent the majority of covered workers, 48 percent. About 15 percent of the employed population chose HMOs, 29 percent were covered by high-deductible health plans (discussed later in this chapter), and fewer than 1 percent chose conventional indemnity plans (Kaiser Family Foundation 2016).
Hmos There are several types of HMOs, as will be discussed in the following section, including open-panel HMOs, closed-panel HMOs, and network HMOs.
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