What is a Managed Care?
The term “managed care” has been around in American society for quite some time. In the 1970s, the term was coined as a concept to describe a methodology used to reduce the overall costs of health care benefits through organizations or techniques from organizations within the health care system. At the core of any managed care program is the ability of a program such as workers’ compensation to finance and deliver services while at the same time meeting statutory requirements as set forth in law.
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Managed Care through a Preferred Provider Organization
A Preferred Provider Organization or PPO is a type of managed care program that is similar to other network-based managed care program such as a Health Maintenance Organization (HMO), Private Fee-For-Service (PFFS) or Point Of Service (POS) program. In the context of a PPO, in order to remain competitive, that organization must seek out medical facilities that will provide medical services at a discounted rate. These medical facilities are able to offer such discounts based on the volume of clients and the number of people they serve. While services are typically only offered at “preferred” medical facilities, the standard of care is the same based on the ethical obligations of medical providers.
Features and Advantages of PPOs
PPOs generally evaluate the need for ongoing care based on utilization review of medical services and care provided to an injured worker. The use of utilization review examines the nature and extent of an injury and analyzes the care one typically would receive based on information collected over a long period of time. The use of utilization review is especially important when it comes to the use of narcotic pain medications and diagnostic procedures that continue to be a driver of rising medical costs.
Unlike other forms of managed care, PPOs maintain their advantage as follows:
- Membership tends to provide substantial discounts for routine medical services;
- Networks create a number of options, including primary care doctors and specialists for injured workers to receive medical care and treatment;
- Treatment received outside a PPO network is generally not as expensive when compared to the same care received in other managed care formats;
- They have broader networks than HMOs and allow injured workers to receive care within a greater geographical area. This is especially helpful to employers with workers in rural areas.
Conclusions
Although workers’ compensation claims in general have been in a decline for the last few years in the United States, employers and insurers are seeing a steady uptick in more severely injured persons. As a result, effective workers’ compensation programs need to be creative in how they approach the complex claims environment to control costs, which is really the bottom line for any programs. By using a Preferred Provider Organization, claims and risk management teams are able to address these issues without sacrificing the quality of care an injured worker receives.
Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact:[email protected].
Editor Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher. www.reduceyourworkerscomp.com. Contact: [email protected].
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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.
