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.