Managed Care Organizations and Healthcare Partnerships, Thesis of Business Accounting

Download Managed Care Organizations and Healthcare Partnerships and more Thesis Business Accounting in PDF only on Docsity!

C

Financial Recourse Management in Healthcare- C

Performance Assessment RCP1-Task 1

A1.

As Chief Financial Officer of Seamus Company, the decision to move away from a fee- for-service model towards a managed care organization has been reviewed. To support the company goals, the proposed managed care strategies are as followed: Preferred Provider Organization, Health Maintenance Organization, and Exclusive Provider Organization. The first of the three fiscally sustainable strategies are the Preferred Provider Organization (PPO). Preferred Provider Organization is a combination of cost-saving strategies like a Health Maintenance Organization, but with some additional features of the traditional insurance plans. When choosing a PPO plan, the recipient is allowed to select his or her own providers, however beneficiaries are encouraged to use providers that take part in the plan. This approach is a cost sharing strategy that encourages members to visit participant physicians within the PPO plan, although not enforced. This is how an organization has the ability to cut healthcare costs is by coming to an agreement with assigned providers. A preferred provider pays an increased cost share for services that are provided within the network rather than those services provided outside the network, which may result in higher premiums and employees’ deductibles. That is why a Preferred Provider Organization costs tend to be more expensive verses other insurance plans. Another strategy is the Health Maintenance Organization (HMO). Health Maintenance Organization is one of the most popular insurance plans. It can be organized either as public or private entities. HMO was developed to encourage healthier lifestyles as well as preventive medicine, which will consequently reduce the overall healthcare costs and hospital admission rates. Unlike its Preferred Provider Organization counterpart, an HMO plan designates the participant with his or her primary care physician. This is just one of several methods that an employer can do in order to control costs. In a Health Maintenance Organization, an employer pays a flat rate monthly premium for services and employees pay smaller co-payments. Since participates are assigned their primary care physician (PCP), the physician has the responsibility for the overall medical needs of the patient. If beneficiaries are in need of care, they must first seek his or her PCP first, however if an issue is beyond the PCP expertise, the PCP will refer the beneficiaries to the appropriate physician within HMO network. This helps keep costs very low for both the organization and its members. The final sustainable strategy is the Exclusive Provider Organization (EPO). Exclusive Provider Organization can be considered a mixture of the HMO and PPO plans. Within this

insurance plan are contracted physicians and hospitals to whom the EPO has arranged discounted rates to offer its beneficiaries. Exclusive Provider Organization offers an array of health services such as doctors, hospitals, specialists, x-rays, laboratory, pharmacies, and more. Under an EPO plan, a participant has to seek care exclusively by the network providers or risk out of pockets expenses. There is however one exception to that rule and that would be in an emergency situation such as stroke or heart attack. An EPO makes things simpler to see a specialist; this is because the plan typically does not require members to have a referral from his or her primary doctor. This unique feature sets itself apart from the Health Maintenance Organization. Unlike PPO members, EPO members lower costs by negotiating rates within the network, which results in lower premium and monthly payments. This concept can be advantageous to an employee’s benefit package and a highly desirable offer from an employer stand point. This is very enticing for members because of the flexibility and freedom to see physicians while maintaining a feasible budget. A1a. While discerning which system will succeed the current fee-for-service health plan, Seamus has to review the cost-saving measures, tax deductions, and fiscal management improvements of each managed care organization. In reviewing the cost-saving measures of the managed care organizations, an EPO is the better way to go. However, all MCO plans exhibit cost-saving characteristics. With all three sustainable strategies comes lower deductibles and fixed premiums. With the lower deductibles and fixed premiums, Seamus can create more innovative ways to reduce costs. Keeping costs low can be achieved by negotiating service rates with the insurance companies, therefore driving costs down. Accompanying all the suggested insurance plans are some tax advantages. Here we will discuss those advantages. One of many benefits for businesses include, but not limited to, tax credit and business expense deductions. What the tax credit companies receive is typically based on a sliding scale. This means the smaller the company is, the more credit the company receives; ultimately putting more money back into Seamus pockets. Another benefit that can aid Seamus in achieving their vision is the business expense deduction. The business expense deduction is when an employer’s health insurance premiums are exceeding the total credits. With these deductions, Seamus can have better control over their financial budgets and help Seamus accomplish and leverage costs. Another area that needs to be reviewed before selecting an insurance plan is fiscal management improvements. One of the fiscal improvements that has been noted for Seamus is the accountability the MCO gives to its employees. By providing a managed care organization to the company, this offers the staff more flexibility and authority over one’s health and financial circumstances. The accountability can be accomplished by allowing members access to the network of services as well as the option to seek care outside those physicians and services if need be. The last, but not least fiscal management improvement that should be addressed is how lower deductibles and fixed premiums provides Seamus with

the knowledge and tools to estimate and forecast future expenses. This would aid Seamus in predicting future trends and budgetary goals for what lies ahead for the company. Having the ability to forecasts future expenses assist in keeping costs low and continue to maintain the visions and objectives of the company. Therefore, that is why it is such a beneficial tool for Seamus as well as other businesses. A1b. In this selection we will discuss the two financial management principles for Seamus Company that sustain the move from a fee-for-service to a managed care organization. The first financial management principle that would support the decision of an Exclusive Provider Organization would be the costs. With the EPO plan, the cost-sharing is remarkably lower than its counter insurance plans due to the in-network providers that are offered. Another reason why the EPO plan would work well for Seamus Company is the cost effectiveness of the plan itself. This plan is cost effective for the company by rendering payment for services only within the group and giving the responsibility to members if they choose to go outside the assigned contracts in the plan. The second financial management principle that supports the choice of an EPO is the control that exist within the plan. Considering that most of Seamus Company’s and its employees overhead comes from health expenses, it is impeccable to control what we can to the best of our abilities. By offering selected physicians and services within an EPO insurance plan, the company can control the care that each beneficiary obtains and by whom. By utilizing the EPO services and physicians, Seamus is able to control the cash flow outwardly as long as the members stay within the network. This way Seamus Company can reach their goals of finding an alternative solution to the fee-for-service. Selecting an EPO as the alternative solution recognizes the organization’s need for change and execute the goals of reducing costs and controls for the Seamus Company. A1c. The strategies of Exclusive Provider Plan listed above is aligned with Seamus Company’s goals of reducing costs. This suggests that an EPO is deemed most cost-efficient out of the analyzed plans mentioned. After further analysis of all options it was in our best interest to choose the EPO plans to meet the objective of our organization and our staff. This EPO plan provides less costs than the Health Maintenance Organization and Preferred Provider Organization plans. By selecting the EPO plan we will have less expenditures, because this method is focused on maintaining one’s health and does not have excessive high premiums for services rendered. We would also like to shift some of the responsibilities to our staff by encouraging them to use services from the contracted providers listed in the network, but allowing them to seek those services outside the plan for a fee. A2. The strategy analyzed and selected is the Exclusive Provider Plan (EPO). A2a.

There are many utilization risks involved with insurance plans. Some utilization risks with the Exclusive Provider Organization is that employees may or may not use the contracted physicians or services within the network. A member might not be fond of the listed physicians and or services offered, so he or she will seek elsewhere for care, which may result in out-of-pockets expenses. Another risk that can be observed is that members might feel restricted by the network of providers that are contracted with the EPO plan. Most often members will tend to seek a doctor only when they become ill. However, this plan incentivizes beneficiaries to annual and regular physicals and check-ups. So, if one deems themselves healthy then they may not seek the care they need from their PCP. A2b. With any insurance plan implementation, there are benefits and drawbacks. Here we will talk about some of the financial benefits that accompanies the EPO. One of the first financial benefits of an EPO is the negotiated rates. This plan contracts with several doctors and services that offer a network of healthcare resources. Negotiating reimbursement rates with the contracted group provides members with lower monthly premiums. This benefits Seamus, because the company’s financial obligation can be controlled and keep rates manageable as long as the participates stay in network. The second benefit would be a system of in-house specialists. When an employer implements an EPO as their preferred health insurance plan, they obtain access to a community of high-quality professionals that their staff can see. Offering high-quality professionals benefits the employer by ensuring its employees will have access to the right care he or she needs if chronic health conditions arises; especially when members do not need a referral. The third benefit is the lower monthly premiums. Premiums are fees that are paid to a health insurance company, which provides the health coverage. Another perspective is that premiums are the amount one pays for coverage. This is typically taken out of employee’s payroll deductions. As a result, this will assist employees with the care they need for an affordable price, as well as help Seamus maintain their financial budget. A2c. As with many insurance companies there are some drawbacks. Here we will discuss a few. The first drawback of an EPO is the network providers are limited. In some cases, some members existing doctor’s may not be a part of the EPO plan. This would force members to change doctors or risk out-of-pocket costs, which might detour employees away. Another disadvantage is the inability to see non listed providers without being responsible for the bill. Since an Exclusive Provider Organization is contracted with a limited about of providers the rates and services are only provided by those with the group. So, any healthcare provided outside the network will be incurred by the employee. The last drawback for selecting an EPO insurance plan is that primary care physicians are not mandatory. Considering that primary care physicians are not mandatory some participants may not take advantage of the routine physical and check-ups. This in turn can result in health concerns, which may lead to more specialized care and services.

A2d. Employees that select to stay with the EPO in network providers and use the services offered by the plan will benefit Seamus Company. This will benefit Seamus Company by maintaining their financial goals. The more employees use the offered EPO plan, the less expenses come out of Seamus Company’s pockets. As long as the employee’s stay within the network, then no extra costs will be expended onto the employee or the company. This will give Seamus Company a smaller obligation to the overall budgetary goals of the business. A3. In this section we will be discussing the healthcare partnerships with the local public health agency and community gym. A3a. Public health agencies are an area of study that deals with preserving and refining the health of the local community. Local public health agency’s visions and goals are to safeguard the health of the entire community. This can be accomplished by researching diseases, promoting healthy lifestyles, and detecting and preventing illnesses. Public health agencies offer programs including, but not limited to, tobacco cessation classes, weight lost and prevention, alcohol or drugs abuse support, and nutritional education. This is why it is so beneficial to Seamus. By partnering with the local public health agency, Seamus can offer employees extra resources in order to manage one’s health; which can financially benefit the company by driving down medical costs. This financial benefit ensures that the company and employees can have access to these resources while still maintaining affordable health costs. Another establishment for Seamus to partner with is the community gym. By collaborating with the local gym, Seamus can put forward discounted fees for members of the work force. This offers members an incentive to stay well. If employees make use of this program, it can help promote healthier lifestyles and preventive therapies that can result in lowering medical costs for the company. So, when Seamus Company and the local public health agencies and community gym team up, it helps not only fulfill those responsibilities to its employees, but to the community as well. A3b. As with every business partnership there will always be some advantages and disadvantages. Here we will discuss a couple of those disadvantages. The first financial disadvantage is overutilization of the public health agency. Since public health agencies strive to better the health of the community, health agencies offer several free services such as tobacco cessation classes, weight loss and prevention, drug and alcohol abuse, and nutritional education. Some people may be more inclined to use these free services versus paying out of network costs. Some employees may misuse these services to maintain one’s overall health instead of seeing his or her primary care physicians. Another disadvantage is underutilization of the local gym. Gym memberships that go untouched could perhaps take a vast amount resources and money away from Seamus. Also, if staff does not take advantage

of the discounted gym membership, Seamus and the local gym may not find reason to continue their partnership. Members that don’t take the opportunity to change their health lose the benefit that comes with reduced costs fitness and overall ends in a financial loss for Seamus. A3c. It has been determined that the partnership with the public health agency, the community gym, and Seamus Company would be beneficial. The partnership has been deemed beneficial, because it offers staff more efficient and effect resources to maintaining one’s health, while managing Seamus budgetary goals. This would help reach the financial goals of the company and lead the way for new innovative means for reducing costs. A3ci. The partnership between Seamus Company, local public health agency, and gym has its benefits. Here we will discuss our determination and why it is beneficial for Seamus. It has been determined that teaming up with the local public health agency and gym would display and fulfill the company’s corporate social responsibility to its community. It would also allow us to offer stronger support to our families and staff. Having the alliance between Seamus, community, and public health will assist the employees with more resources that can help keep costs affordable. This is the same for Seamus Company. The collaboration between both entities helps Seamus with an innovative way to save on health insurance costs.