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Show Any Willing Provider: An Unacceptable Risk for a Marginal Gain Samuel Sutton their lower level of involvement with the PPO's administrative and oversight functions. Still, like HMOs, patients of PPOs are usually restricted to attending only the providers that are a part of the network. Table 3 illustrates HMO membership distribution across three different types of HMOs (as defined by the NCHS). Table 3 Percent ofenrollees per type of plan as a percentage of total HMO members IPA* Group Mixed 1976 6.6 93.4 1980 18.7 81.3 1985 30.4 69.6 1990 41.6 58.4 1995 39.4 26 34.5 1998 42.6 18 39.2 2000 41.3 18.9 39.9 2003 38.9 22.4 38.7 2004 35.8 22.2 42 Source: National Center for Health Statistics. (2004a). Note: the following definitions are used by the NCHS in this report: *Individual Practice Association: a healthcare provider organization composed of a group of independent practicing physicians who maintain their own offices and band together for the purpose of contracting their services to HMOs, PPOs, and insurance companies. Group Model HMO: an HMO that contracts with a single multispe-cialty medical group to provide care to the HMO's membership. Mixed Model HMO: combines features of more than one HMO model. For the purposes of this report, most IPAs could be defined as PPOs and most Group Models as HMOs. Due to the differences in how each MCO operates as well as differences in the definitions used, the definitions and data results may vary. Pros and Cons of the MCO Industry In exchange for the obligations and restrictions placed on them by MCOs, doctors and hospitals that choose to join the network get something in return: patients. Providers who are members of an HMO or PPO usually receive exclusive access to the patients insured by the organization. In exchange for adhering to their end of the deal - namely price discounts and quality standards - doctors are promised a certain volume of patients by the MCO. If, for example, an MCO has five doctors on their panel and 100 patients, they can guarantee 20 patients to each provider. This allows doctors and hospitals to accept the rates set forth by the MCO, which are often lower than rates found in the open healthcare market, since they are fed a guaranteed number of patients without the need to recruit or advertise. This volume discount is therefore one of the most powerful tools MCOs have in keeping healthcare costs low. Also, doctors and clinics can usually cut down on their administrative costs dramatically by becoming members of an MCO. Since many patients may come from the same organization, the healthcare provider does not have to spend as much time dealing with the different procedures and bureaucracies of various insurance companies, which can be in itself a very complicated and time-consuming challenge. However, in order to guarantee a certain volume of patients to their providers, MCOs can only accept a certain number of doctors and clinics into their system. This is why they are often referred to as closed-panel organizations; the number of patients insured by the program usually dictates provider membership in the network. If the MCO hires on too many doctors, they will not have enough patients to spread around to keep all of the providers satisfied, and there-fore will not be able to negotiate such deep discounts. This is the trade-off for consumers covered by an MCO: choice. Since their health insurance will only cover procedures administered by a member of the network or panel, patients who do not want to pay for the treatment themselves must go to one of the providers on the list - and a general rule of thumb in the insurance industry is the lower your insurance premiums, the shorter your list of approved doctors will be. These restrictions can create a tough set of problems for those insured by an MCO. If a patient's preferred doctor is not a member of the closed panel, their insurance will simply refuse to pay for the clinic's services - regardless of any pre-established personal or professional relationships. This presents an especially problematic dilemma when an employer decides to switch the company's health coverage from one insurer to another (or even sometimes just switch plans with' in the same company). If an employee's current doctor is not covered by the new health plan, they are forced to switch to someone who is - unless, of course, they want to pay for the continued service out of their own pocket. Mandating this kind of switch in personal physicians can incur other costs as well. When one doctor's office has been caring for a patient for a long time, they have accumulated not only a personal and professional relationship with that patient, but also a plethora of past medical records-Transferring these physical files can sometimes be only a minor hassle, but transferring the personal and professional relationship and knowledge is obviously another matter. If the patient's medical history does not become familiar to the new physician even more serious problems can occur, such as allergic reactions or even a misdiagnosis of symptoms which arise under some pre-existing condition. Furthermore, this lack of choice can be an especially tough problem for those in rural areas - or, for that matter) anyone who is not located geographically close to a provider of their MCO. There may be a clinic or doctor's office just down the road, but if they are not on the panel of a patient s 76 |