The Evolution of Managed Health Care: A Historical Perspective

The concept of managed health care has been around for decades, with its roots dating back to the 1930s. The first managed care plan was the Kaiser Permanente health plan, established in 1930 by Henry J. Kaiser and Sidney Garfield.

In the early 1970s, the health maintenance organization (HMO) model emerged as a way to manage health care costs and improve quality. The first HMO was established in 1972 by a group of physicians and businessmen in Cambridge, Massachusetts.

The HMO model gained popularity in the 1980s, with the number of HMOs increasing from 140 in 1980 to over 1,000 by 1985. This growth was driven by the need to control rising health care costs and improve access to care for more people.

Managed health care has its roots in the late 19th century, when a small number of physicians in the US began providing prepaid medical care to workers. This was the first form of managed care.

The first prepaid group plan was established in 1910 in Tacoma, Washington, for lumber mills. Blue Cross and Blue Shield Plans also emerged around this time, offering prepaid plans for hospital care and professional services.

Prepaid contracts between employers and employee associations were relatively common during the Great Depression of the 1930s. In the 1970s, the federal government and many large private companies encouraged workers to join prepaid forms of health care groups.

Here's a brief timeline of the early origins of managed care:

By the mid-1980s, employers were increasingly turning to managed care to contain the cost of providing health care benefits to workers.

Managed health care has a rich history that spans over a century. The first form of managed care emerged in the late 19th century when physicians provided prepaid medical care to members of fraternal orders and unions.

The concept of prepaid medical care continued to grow, with railroad, mining, and lumber companies organizing their own medical services or contracting with medical groups to provide care for their workers. By the 1930s, prepaid contracts between employers and employee associations were relatively common.

In the 1950s, the government began to encourage the development of Health Maintenance Organizations (HMOs). The Health Maintenance Organization Act was passed in 1973, which marked a significant turning point in the growth of managed care. The act encouraged the rapid growth of HMOs, the first form of managed care.

By the 1990s, managed care had become the dominant form of health care delivery, with 95% of private insurance companies using some form of managed care. Today, the vast majority of privately insured Americans are covered by some form of managed care.

Here are some key milestones in the history of managed care:

In the 1990s, the French healthcare system was considered an "unmanaged" system, where patients could choose their provider without the usual networks and utilization review found in the United States.

This meant that patients had a significant amount of freedom to select their own healthcare providers without any restrictions or oversight.

The French system was often cited as an example of how healthcare could be delivered without the need for managed care.

The lack of managed care in the French system led to a healthcare system that was very different from what we see in the United States today.

Here are some key characteristics of an unmanaged healthcare system:

The French system was not without its challenges, but it did offer patients a high degree of autonomy in their healthcare choices.

Managed care programs come in various forms, each with its own level of restrictiveness. They range from more restrictive to less restrictive.

Health maintenance organizations (HMOs) were proposed in the 1960s by Dr. Paul Elwood and became law in 1973. An HMO is a coordinated delivery system that combines financing and delivery of health care for enrollees, with a primary care physician (PCP) serving as a "gatekeeper" for overall care.

In an HMO, specialty services and non-emergency hospital admissions require specific referrals or pre-authorization from the PCP. Services are typically not covered if performed by a provider not an employee of or specifically approved by the HMO, unless it's an emergency.

Managed care organizations often use preferred provider organizations (PPOs), which allow members to receive discounted services from partnered professionals. Unlike HMOs, PPOs do not have copayment but offer deductibles and coinsurance features.

Here are some key differences between HMOs and PPOs:

Overall, managed care programs aim to control costs by using selective contracting, innovative economic incentives, and utilization review.

Managed care comes in many forms, each with its own unique characteristics. One of the most well-known types of managed care is the Health Maintenance Organization (HMO).

An HMO is a coordinated delivery system that combines both the financing and the delivery of health care for enrollees. Each member is assigned a "gatekeeper", a primary care physician (PCP) responsible for the overall care of members assigned.

HMOs are licensed at the state level, under a license that is known as a certificate of authority (COA), rather than under an insurance license. They have a copayment cost share feature, where a nominal payment is generally paid at the time of service.

Another type of managed care is the Preferred Provider Organization (PPO). A PPO is a membership that allows a substantial discount below their regularly charged rates from the designated professionals partnered with the organization.

PPOs offer a deductible and a coinsurance feature, where the deductible must be paid in full before any benefits are provided. After the deductible is met, the coinsurance benefits apply.

A Point of Service (POS) plan uses some of the features of each of the above plans. Members of a POS plan do not make a choice about which system to use until the service is being used.

POS plans have levels of progressively higher patient financial participation, as the patient moves away from the more managed features of the plan.

Here are the main types of managed care:

Each of these types of managed care has its own unique characteristics and benefits. By understanding the different types of managed care, individuals can make informed decisions about their health care coverage.

An Independent Physician Association (IPA) is a type of organization that contracts with a group of physicians to provide service to HMO members. The physicians are usually paid on a basis of capitation, which means a set amount for each enrolled person assigned to that physician or group of physicians, whether or not that person seeks care.

IPAs are not exclusive contracts, so individual doctors or the group may sign contracts with multiple HMOs. This allows physicians to serve both managed care and fee-for-service patients.

Physicians who participate in IPAs usually have a governing board to determine the best forms of practices. This board helps make decisions for the IPA.

Here are some common characteristics of IPAs:

Managed care systems often involve contracts with health-care providers, such as capitated payment systems, where a prepaid amount is paid for blocks of services.

A capitated payment system is a contract between managed care organizations and health-care providers involving a prepaid amount for blocks of services.

Health maintenance organizations (HMOs) are a type of managed care system that involves payment contracts with a group or panel of health-care providers. This was made possible by the Health Maintenance Organization Act of 1973.

Medicaid is a program jointly funded by state and federal governments that reimburses hospitals and physicians for the care of individuals who cannot pay for their own medical expenses.

Preferred provider organizations (PPOs) are another type of managed care system involving payment contracts with a group or panel of health-care providers.

Case managers are professionals who design and monitor implementation of comprehensive care plans for individuals seeking mental health or social services.

A deductible is the amount of money that must be paid out of pocket by health-care consumers before the insurance provider will make payments.

Carve-out plans are managed care plans that make provision for mental health services by creating subcontracts involving different terms of payment and utilization review from those used for general health care.