ASSIGN9.docx - Assignment 9 1 What are some of the key...

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Assignment 91.What are some of the key differences between traditional indemnity insurance and managed care?Traditional health insurance system, insurance companies had no incentive to manage the delivery of services and how the providers should be paid, which caused the costs to be very high. Managed care integrates the functions of financing, insurance, delivery, and payment within one organizational setting and exercises formal control over utilization2.What are the three main payment mechanisms used in managed care? With each mechanism, who bears the risk?The three main types of payment arrangements with providers are capitation,discounted fees, and salaries. The three methods allow risk sharing invarying degrees between the MCO and the providers. Risk sharing puts the burden on the providers to be cost conscious and to curtail unnecessary utilization. Capitation refers to the payment of a fixed monthly fee per member to a health care provider. Risk in capitation shifts from the MCO to the provider. Discounted fee arrangements can be referred to as a modified form of fee for service. The risk is borne by the MCO, but the MCO can lower its costs by paying discounted rates. Providers agree to discount their regular fees in exchange for the volume of business the MCO brings them. Under salaries the risk shifts from the MCOs to the physicians3.Explain how the fee-for-service practice of medicine led to uncontrolled utilization.There was no control over delivery and payment, patients were free to see any provider they wanted. new technology attracted patients which caused providers and hospitals to compete, to have the latest and greatest rather than cost or quality, insurance companies did not monitor the amount that was being chargedto the patient by the provider, they itemized every little thing, insurance
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