Briefly discussed Managed Care in USA (Between HMO and PPO)

1. Health Management Group Work 2019
HMOs
and PPOs
In the USA
Healthcare Management Functions

2. Our Team Style
Kukuladze Elene
(LGPGDI)
Dayoub Yaman
(OURI0H)
Muhlis Abdu Nafan
Aisul
(O8BTXH)
Kayembe Tshianyi
Ruben
(EWUXY2)

3. Contents
Healthcare and Health
Insurance in the USA
01
Overview
Managed Care
02
Definitions, History and Trend
HMOs
03
Definitions, Trend and the Differences
PPOs
04

4. Health Care in the USA
There is not a fully implemented universal
Health Care in the USA
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01
Health Care is Expensive
02
Most people have Health Insurance
03

5. History of Health Care and
Health Insurance in The US
1910-1940 1940-1960 1960-1970 1970-1980
Development of 2 models
1. Prepaid Medical Group
practices
2.The blues
The Expansion
of Health Benefits
The Onset of Health
Care Cost Inflation
The Rise
of Managed Care
1980-1990
1990-2000
2000-2010
2010-Present
Growth and
Consolidation
The Managed Care
Backlash
HMOs and PPOs Plans
Shrink, Costs grows,
And Coverage Erodes
The ACA and the
Ongoing Evolution of
the US HealthCare
Market

6. Managed care is an approach to the delivery of
healthcare services in a way that puts scarce
resources to best use in optimizing patient
care, and acually it has transformed the US
healthcare delivery system
Introduction
The healthcare delivery revolution grew
rapidly, especially in densely populated
geographic regions following the passage
of the Health Maintenance Organization
(HMO) Act of 1973
Managed Care in the USA

7. The term managed care or managed healthcare is used in the United States
to describe a group of activities ostensibly intended to reduce the cost of
providing health care while improving the quality of that care ("managed care
technique)
FUNDAMENTAL CONCEPTS
OF MANAGED CARE
intended to reduce unnecessary health care costs through a variety of
mechanisms, including: economic incentives for physicians and patients to
select less costly forms of care; programs for reviewing the medical necessity
of specific services; increased beneficiary cost sharing; controls on inpatient
admissions and lengths of stay; selective contracting with health care
providers; and the intensive management of high-cost health care cases etc.
The programs may be provided in a variety of settings, such as HMO &PPO .

8. Managed Care Specification
MC developed in response
to unmet economic and
social needs
MC is neither a
singular process
nor a static event
MC struggles to balance
quality of care with cost
efficiency
MC continues to evolve in
an attempt to meet the
needs of private and
government plan sponsors
as well as patient-
members
It’s plans : HMO - PPO - POS
.

9. Definition
Health Maintenance
Organization (HMO)
A health maintenance organization is
defined as “an organization that combines
the provision of health insurance and the
delivery of health care services.” (Given
1994)
An HMO is made up of a group of
medical insurance providers that limit
coverage to medical aid provided from
doctors that are under the
contract of the HMO. (Hayes Adam,
2019)

10. Brief History of HMOs
The cumulative
record is remarkable.
HMO enrollment
exploded from 3
million in 1970 to
94,8 million in 2017
For profit businesses
and the stock market
began to play a
major role in the
expansion of HMOs
The HMO bust
aggressive growth
in both enrollment
and capitalization.
The movement grew
slowly and fitfully in
its first few decades.
the majority of HMO
enrollees belonged
to the Kaiser system
Early HMOs and
HMO-like institutions
developed.
Employees of the
Federal Home Loan
Bank organized the
Group Health
Association (GHA) of
Washington DC in
1937
1930s 1940s –
1970s
Late of
1970s
1987 -
1990
2000
- now

11. How an HMO Works
An HMO usually offers lower monthly and annual
premiums than other types of insurance plans, also
tend to have lower copays and coinsurance
An insured person must get his care and services from
doctors under the HMO network (unless for
emergency care and dialysis)
Coverage under a HMO may require the insured to live
or work in the plan's area of network in order to be
eligible for coverage.
An insured person cannot see a specialist unless the
primary care physician (PCP) refers them to a
specialist*.

15. PPO Preferred Provider Organizations
A preferred provider organization (PPO) is a medical care arrangement in which medical
professionals and facilities provide services to subscribed clients at reduced rates.
Like an HMO, there are a limited number of doctors
and hospitals to choose from. When you use those
providers (sometimes called "preferred providers",
other times called "network providers"), most of your
medical bills are covered.
When you go to doctors in the PPO, you
present a card and do not have to fill out forms.
Usually there is a small co-payment for each
visit. For some health care services, you may
have to pay a deductible and coinsurance.
As with an HMO, a PPO requires that you
choose a primary care doctor to monitor your
health care. Most PPOs cover preventive
care. This usually includes visits to the doctor,
well-baby care, immunizations, and
mammograms.
In a PPO, you can use doctors who are not part
of the plan and still receive some health
insurance coverage. At these times, you will
pay a larger portion of the bill yourself (and also
fill out the claims forms).
A preferred provider organization is a
managed-care organization consisting of
medical professionals and facilities such as
primary and specialty physicians, hospitals,
and other healthcare professionals. These
professionals contract with the insurance
provider to render subscribed participants
services at an agreed upon reduced rate. In
exchange for reduced rates, insurers pay the
PPO a fee to access the network of providers.
It is a combination of traditional fee-for-
service and an HMO.

16. Participating Provider
Agreement (PPA)
PPO plans tend to charge higher premiums because
they are costlier to administer and manage.
However, they offer more flexibility compared to
alternatives plans. PPO networks are large,
with providers in many cities and states. The
flexibility in choosing a provider or accessing a
provider in urgent situations provides value to
participants.
The key document establishing the relationship
between the PPO and the participating provider is
the participating provider agreement (PPA),
which sets forth the obligations of each participating
provider. The PPA creates the network of providers
offered to the PPO's payers. Unfortunately, providers
often sign the PPA with little attention to the
obligations that the agreement imposes. In this
section, some of the key features of the PPA are
addressed.

17. A PPO plan may be right for you if:
You will probably have an annual deductible
to pay before the insurance company starts
covering your medical bills. You may also
have a co-payment of about $10 - $30 for
certain services or be required to cover a
certain percentage of the total charges for
your medical bills.
.
- You want the freedom to choose almost
any medical facility or provider for your
healthcare needs
- You want a portion of out-of-network
claims to be covered by your insurance
company
- You don't want to get referrals before
visiting a specialist
.
PPO
Preferred Provider Organizations

18. FREQUENTLY ASKED
QUESTIONS
Can you get your health care from any doctor, other health care provider, or
hospital?
-In most cases, you can get your health care from any doctor, other Health care provider, or hospital in
PPO Plans. PPO Plans have network doctors, other health care providers, and hospitals.
Each plan gives you flexibility to go to doctors, specialists, or hospitals that aren't on the plan's list, but it
will usually cost more.
Are prescription drugs covered?
- In most cases, prescription drugs are covered in PPO Plans. Ask the plan. If you want Medicare drug
coverage, you must join a PPO Plan that offers prescription drug coverage. Remember, if you join a
PPO Plan that doesn't offer prescription drug coverage, you can't join a Medicare Prescription Drug Plan
(Part D).
Do you need to choose a primary care doctor?
-You don't need to choose a primary care doctor in PPO Plans.
Do you have to get a referral to see a specialist?
-In most cases, you don't have to get a referral to see a specialist in PPO Plans. If
you use plan specialists, your costs for covered services will usually be lower
than if you use non-plan specialists.

19. PRICING MECHANISM
by which the PPO comes to an agreement with the providers regarding prices
THE POWER OF
ATTORNEY STRUCTURE
BLACK
BOX
THE MESSENGER
MODEL
Black box -The PPO that uses the "black box" model retains an independent consultant to develop
and recommend a competitive fee structure for the PPO. In developing this charge structure, the
consultant does not consider the preferences of any individual participants in the PPO.It is
important to appreciate that the "black box" approach need not be limited to a single price for each
service. Under this model, both the PPO and the payers know the terms and extent of the network
as of the time of the initial negotiations. The "black box" thus helps facilitate negotiations with
payers and makes the process both more efficient and less time consuming.
The power of attorney structure - allows participating providers to transfer to the PPO their power
of attorney to enter into any managed care arrangement that meets certain standards. Once the
PPO enters into an arrangement, the participating providers are bound, with no opportunity to opt
in or opt out of the arrangement. For greater flexibility, providers can offer a menu of prices based
on the volume of patients controlled and/or steered to the provider by the payer.
The key aspect of the messenger model is that the entity wishing to purchase health care, that is,
the payer, effectively makes the first offer regarding the payment terms.The purchaser then
indicates the proposed scope of the network and the type of pricing structure that it desires.If the
initial offer is not accepted by enough providers, the purchaser may need to change its offer and
the process must be repeated. Due to the cumbersome, inefficient nature of the process, the
messenger model has not been particularly attractive.

20. HMO and PPO plans
HMO
PPO

21. Major Differences – HMO vs PPO
85
%
35
%
Provider Networks
A network is a group of healthcare providers that are under contract with insurance companies to offer discounted services for a
particular HMO or PPO plan. They typically include general physicians, along with specialists such as dermatologists and
chiropractors. In order to receive coverage in an HMO, you must first see your PCP, no matter what the problem is. If they can’t treat
you, they will refer you to someone else within the network. Staying within your network in an HMO plan, you can expect maximum
insurance coverage. Go outside of the network and your coverage vanishes. With a PPO, you can visit doctors outside the network
and still get some coverage, but not as much as you would if you remained in the network.
Cost Analysis
With a PPO, the trade-off for receiving the freedom of choice and flexibility is higher premium costs for the plan. An HMO offers no
coverage outside the network but patients enjoy lower premium costs.
Claims Forms
With an HMO, patients do not need to file a claim because healthcare providers are paid directly by the insurance company. Under
PPO, however, patients must sometimes first pay out-of-network providers and then file a claim for reimbursement from the insurance
company.
Services Covered
The range of services provided under the two plans depends on the company and the type of plan taken, but are usually similar.
Prescriptions
Just like the coverage under a HMO is limited to a network, so are the pharmacy locations where one can get their prescriptions filled
and covered under the plan. PPOs allow patients to fill a prescription almost anywhere but with additional charges for an out-of-
network pharmacy.
Exceptions
Patients with an HMO plan do not need a referral during an emergency or for in-network visits to a gynecologist or obstetrician

22. Premiums
To begin with, premiums for an HMO are usually lower than for
a PPO. But the provider network will be more restrictive, and
you have to coordinate medical care through a primary care
physician (PCP).
According to the Kaiser Family Foundation 2018 health benefits
survey, published in October 2018, the average monthly
premium paid by firms of all sizes for a single person HMO was
$572, and for a family, was $1,620, with annual average
premiums totaling $6,869 for an individual and $19,445 for a
family.
For a PPO, the average monthly premium paid by firms of all
sizes was $596, and for a family, $1,694, with annual average
premiums totaling $7,149 for an individual and $20,324 for a
family.
Besides lower monthly premiums, HMOs typically have the
lowest out-of-pocket costs. Depending on the specifics of the
HMO plan offered by a particular company, you might have a
low deductible or even no deductible. But, if you use a provider
not part of your HMO network, be prepared to pay 100% of the
cost.

25. HMO PPO
Do I need a Primary Care Physician?
Yes, under an HMO plan your PCP
coordinates all of your healthcare decisions.
No, a PPO doesn’t require a PCP. You can
select any doctor you choose, but you will
pay more for out-of-network care.
Do I need a referral to see a specialist?
Yes, you will need a referral from your PCP
to see a specialist or receive care from a
hospital.
No, if you want to see a specialist, or go to a
hospital, you make the appointment yourself.
Will any care I receive from an out-of-
network provider be covered?
No, HMO plans do not offer coverage for
healthcare from an out-of-network physician
or hospitality, except in case of emergency.
Yes, PPO allows you to see any medical
provider, including those who are out-of-
network. As previously said, you will have to
pay higher out-of-pocket costs.
Will I have to file a claim?
No, because HMOs restrict your care to in-
network providers, you’ll most likely never
have to file a claim because your insurance
company pays the provider directly.
Yes, if you receive out-of-network care, you’ll
have to submit your claims to be
reimbursed.
How much will these plans cost? Generally, lower costs. Generally, higher costs.

26. HMOs and PPOs Trends

27. There is no universal answer to the question
of which is better, an Hmo or PPO. It is
largely based on the personal preferences of
customers. The bottom line is that HMOs
provide affordability while PPOs provide
greater flexibility and freedom of choice.
Deciding which is better for you depends on
your current or expected health needs.
Paying the lowest possible monthly premium
may appear right for you now, as time goes
on you might want more flexibility like a lower
deductible later.
The Final Choice – HMO or
PPO?

28. References
Trends in Private Health Insurance and Issues Affecting Families and Pediatric
Provides,Margaret McManus and Lou Terranova, 2016, American Academy of
Pediatrics and Catalyst Center, https://www.aap.org/en-
us/Documents/gettingpaid_emergingtrends_private_insurance.pdf
Payer Digest, 2018, Managed Care Digest Series 32nd Edition,
www.managedcaredigest.com
Managed care : the US Experience, 2000. Neelam K. Sekhri, Bulletin of The World
Health Organization, https://www.who.int/bulletin/archives/78(6)830.pdf
Role of Managed Care in The US Healthcare System, Robert P Navarro and Judith
A Cahill, Jones and Bartlett Publishers,
https://samples.jblearning.com/0763732400/32400_CH01_Pass2.pdf
A Hystory of Managed Health Care and Health Insurance in the United States, 2015.
Peter D Fox and Peter R Kongstvedt,
http://samples.jbpub.com/9781284043259/Chapter1.pdf
HMO-PPO Digest, 2016, Managed Care Digest Series 30nd Edition,
https://www.managedcaredigest.com/pdf/HMO-PPO.pdf
The Origins of Managed Health Care, Jones and Bartlett Publishers,
https://samples.jblearning.com/0763759112/59117_CH01_Pass2.pdf

29. References
Preferred Provider Organization (PPO)
Reviewed by Mitchell Grant and Julia Kagan
Updated May 14, 2019
https://www.investopedia.com/terms/p/preferred-provider-organization.asp
PPO Insurance Plans
https://www.ehealthinsurance.com/health-plans/ppo
Preferred Provider Organization (PPO)
https://www.medicare.gov/sign-up-change-plans/types-of-medicare-health-
plans/preferred-provider-organization-ppo
Annals of Health Law Preffered Provider Organization Structures and Agreements
1995, James C. Dechene
Sidley &Austin
Preferred Provider Organization (PPO)
https://www.cigna.com/individuals-families/plans-services/plans-through-
employer/ppo
Managed Care Digest Series 2018
Payer Digest
Commissioned, sponsored and underwritten by Sanofi, Bridgewater, NJ
Managed Care Digest Series 2016
Commissioned, sponsored and underwritten by Sanofi, Bridgewater, NJ

30. References
Competition in Health Insurance A Comprehensive Study of US Markets, 2018,
American Medical Association, https://www.ama-assn.org/system/files/2018-
11/competition-health-insurance-us-markets_1.pdf
Assessing PPO Performance on Prevention and Population Health, 2001, Helen
Halpin Schauffler and Sara McMenamin, University of California Berkeley.
https://pdfs.semanticscholar.org/3c10/87d468cedee3fa96baa939cdbe92a192e4ff.pd
f
Health Maintenance Organization (HMO), 2019. Adam Hayes,
https://www.investopedia.com/terms/h/hmo.asp
Brief History of Health Maintenance Organizations.
https://www.rand.org/content/dam/rand/pubs/rgsdissertations/RGSD172/RGSD172.
ch1.pdf

31. Thank You