HW Lecture 9 (Managed Care) Econ 3108 Health Economics Instructor: Dr. Richard

HW Lecture 9 (Managed Care)

Econ 3108

Health Economics

Instructor: Dr. Richard Gearhart

Answer 2 of the questions.

For written answers you must use complete sentences.

For calculation and graphical problems, explain your answer, show any calculations, and fully label graphs.

Managed Care

For the final exam, you should know the following acronyms for types of managed care organizations. Know what the acronym stands for, how they operate, and how each plan differs from one another. HMO, FFS, IPA, PPO, POS, CDHP, ACO, and capitation.

In general, what problem do MCO’s, managed care organizations, try to fix in the health insurance market and how do they do it? Keep it brief.

What is a capitated physician payment, and how does it differ from a fee for service payment?

Explain the incentives that restrict a doctor’s usage of medical care under a capitated payment scheme.

How does the gatekeeper model restrict medical care usage, and why may it not be a cost-effective practice for an MCO?

Suppose that 3 football players, Kellen, DeShaun, and Vic, start experiencing joint discomfort in their knees. Kellen is enrolled in an HMO. DeShaun is enrolled in a PPO. Vic is enrolled in a CDHP. Make up a story about where they get care, what type of care they get, how much they pay for care, and how likely each is to decide to skip getting any care at all. Your story should include something about how the patients are/are not limited and say something about the physician/hospital side of the story. What is the conclusion of your story regarding the patients’ health outcomes?

How might your story change if, instead of joint discomfort, each experienced a very traumatic knee injury?

Health Maintenance Organizations (HMOs) have substantially lower hospitalization rates per person than do Fee for Service (FFS) insurance plans. Would you say that this is mostly due to (a) the use of preventive medical care by HMOs, (b) financial incentives to patients, (c) financial incentives to doctors, (d) because the HMOs manage to enroll mostly healthy people anyway, or (e) none of the above? What evidence do you know to support that the thing you selected has a significant effect on the total amount of medical care patients receive?

Discuss the major differences between a standard health insurance package (fee for service, or FFS) and an HMO, in terms of (a) financial risk to consumers, (b) health risks to consumers, (c) total medical care use, (d) convenience to consumers and (e) any other key facets of the comparison that you think relevant.

We know that second opinions are a way for an MCO to limit the consumption of health care by its enrollees. We know that this can hurt an individual by increasing the time he waits to receive treatment, and can lead to costly litigation. What is a 3rd problem of a health insurance company requiring a second opinion.

Name 5 ways a managed care organization can limit consumption of healthcare by its members.