The shift to managed care will occur within a framework of concepts that will guide the entire design effort. These concepts can be summarized as follows:
Capitation. Capitation is making a fixed payment in exchange for the guarantee that individuals sewed by the managed care organization (MCO)/provider will receive necessary services when they are needed. It is one way to achieve singlestream funding and flexibility.
Risk. Risk refers to the extent to which an MCO/provider faces potential economic losses or gains after having agreed to accept a fixed payment for furnishing specific services. In managed care, risk can be borne by the payer (state), solely by the MCO/provider, or shared between the MCO/provider and the state.
Care Criteria. Care criteria refers to the circumstances under which a covered service
(or an acceptable alternative) must be furnished to an enrollee. It is an obligation that the MCO/provider has to the funding agency and to enrollees. In health care, care criteria are clinicallybased; whereas in long term supports, care criteria will constitute a plan's "medical necessity" foundation.
Utilization Management. Utilization management is a set of processes that are designed to ensure that: (a) services are necessary; (b)furnished in accordance with care criteria/protocols; and (c) efficacious. It seeks to root out services that are unnecessary.
Gatekeeping/Care Management. Gatekeeping directs enrollees through the managed system. It is the first stop and, therefore, the point of access to services. It is most closely akin to the DD case management system. Care management usually refers to the intensive, continuous coordination of services by trained professionals on behalf of individuals with complex conditions that necessitate the involvement of several practitioners/service providers.
Service Substitution. Service substitution means furnishing an equally effacious, lower cost service for a more costly one. This process plays a larger role in managing health care costs. Exchanging a cheaper, inappropriate option for a more costly but necessary, one does not represent service substitution.
Supplier Network Management. Supplier network management refers to efforts by MCO's to establish contractual relationships with primary service providers in order to secure an adequate supply of providers at an affordable price. The extent to which an MCO can obtain lower prices depends on market factors, including the supply of potential vendors and the MCO's market share or bargaining power.
Managed Care Organization. An entity, whether it be public or private, that exercises overall management of the service delivery process. The precise dimensions of the MCO's role are defined by the responsibilities assigned to it by the purchaser of services. An MCO may have comprehensive responsibilities and be held at full risk or have limited responsibilities and bear no risk, which would mean that it functions as an administrative services organization. Payers determine the role they want the MCO play.
Safeguards. In any managed care arrangement, consumers/enrollees must be afforded safeguards to prevent MCOs from shirking their obligations. Consumer safeguards generally include a process for independently resolving grievances. It is the payer (the state's) responsibility to put into place safeguards to ensure that the plan is performing as contractually obligated. The payer also needs continuous and periodic information about plan performance on both a process and outcome basis.
Each managed care model will have its own distinctive characteristics, but the above concepts will be critical to its success.