Academic journal article Generations

Myths about Managed Care

Academic journal article Generations

Myths about Managed Care

Article excerpt

Myth: Managed care saves Medicare lots of'

Reality: Under current payment arrangements, managed care costs rather than saves Medicare money. Medicare pays managed care plans a capitation, or per enrollee payment, set to equal 95 percent of a similar individual's costs in the fee-for-service system. However, these payments do not reflect the fact that beneficiaries who enroll in managed care tend to be healthier and likely to use less care. For people who enroll, then, Medicare actually pays more than loo percent of what spending would have been had they stayed in the fee-for-service system.

The Balanced Budget Act of I997 requires changes in the payment mechanism (risk adjustments) to avoid continued overpayment.

Myth: Managed care plans provide lowquality care.

Reality: Surveys suggest that most beneficiaries are quite satisfied with the care they receive in managed care plans, and there is little evidence that, overall, quality of care in managed care differs from quality of care in the fee-for-service system. There is, however, some evidence of underservice for particular groups (low income, chronically ill).

Myth: Managed care plans coordinate care and increase efficiency.

Reality: Although managed care encourages coordination and efficiency, there is more evidence that health plans manage "costs" more than "care." Some of managed care's strongest proponents observe that, to date, managed care has not achieved hoped-for changes in clinical practice.

Myth: Managed care is managed care is managed care. …

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