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ManagedCare and Accountable Care Organizations.

ManagedCare is a term in the US that is often used to refer to theprocedures that aid in making quality health care services moreaffordable to the citizens (Fisher et al., 2012). Differentorganizations enroll to other agencies that provide such services soas to enable their employees to benefit from the provision ofaffordable and quality healthcare. Some of the types of managed careplans include the Health Management Organization, the PreferredProvider Organization and the Point of Service. All the threeprograms focus on the primary goal of Managed Care, but each has adistinctive feature.

Typesof Managed Care Plans and their Features

TheHealth Management Organization (HMO) allows the registered members toaccess health care services on a prepaid basis. According to Casalinoet al. (2015), individuals in this plan are allowed to access medicalservices at any cost by paying a fixed monthly fee. With the prepayfeature, the Health Management Organizations offer all sorts ofmedical services to its members. The prepaid feature in this plan isreferred to as the premium contribution and is paid at a fixed rateby both the employer and the employee before an employee receives themedical care provided by the plan. The plan, however, expects thatthe members obtain their medical services from the doctors andhealthcare facilities provided by the HMO. The HMO provides acontrolled system where one has to select a first-contact physicianfor all their medical needs (Fisher et al., 2012). It restricts oneto the contact a physician for the provision of general medical careand consultation before taking any alternative step. Again, it coversa broad range of benefits which include hospitalization, surgery,among others, but the employee has no provider choice (Fisher et al.,2012). With such a controlled system, the HMO fee increases at aslower rate compared to other insurance plans.

ThePreferred Provider Organization (PPO) is a managed care plan that,unlike the HMO, does not restrict its members from accessingdifferent physicians or medical care facilities (Casalino et al.,2015). With such unrestricted systems, the members of such a plantend to pay more when they access medical services from the selectedmedical network. Casalino et al. (2015) say that, unlike the HMOwhere the premium contribution is monthly, members of the PPO planhave an annual deductible amount and a co-payment. The plan providesthe member with some healthcare networks to select from, and byobtaining services from the preferred network, they are only liableto pay the copayment for the visit and the annual deductible amount.Here, the cost sharing during service delivery occurs as deductibles,which is a fee that the employee must pay before they enjoy theservices of a healthcare provider. On the other hand, the copaymentsare the payment made by the employee when they receive health careservices. This plan offers members the freedom to choose betweendifferent providers, as suggested by Paul et al., (2014).

Thepoint-of-service plan is another managed care plan, which is providedby the employer. It occurs as a blend of health maintenanceorganization and the preferred provider organization (Fisher et al.,2012). The features of both the Preferred Provider Organization andthe Health Management Organization are fused in this plan. It is madeof a network of healthcare providers where the employee is requiredto choose a primary physician as a primary contact but also gives aprovision of getting health services from outside the network butwith a higher charge. With such a plan, one is not required to pay adeductible and only pays a slight copayment when working with thehealthcare providers within the network. Preferred ProviderOrganization’s plan charges apply when one chooses to obtain carefrom outside the network. In such an instance, one is required to paya deductible and a copayment that includes a certain fraction of thecost incurred during the dispensation of the services (Paul et al.,2014). Such a plan, therefore, allows the employee or member toaccess the benefits of both the HMO and PPO. The Preferred ProviderOrganization plan is more flexible thus giving the employee a fullrange of options depending on their preference, need, and financialability.

PreliminaryResearch on Accountable Care Organizations

AccountableCare Organizations (ACOs) are alliances formed between hospitals andcare providers for the sake of benefiting the patient and thephysicians, as explained by Fisher et al., (2012). They areestablished in different states, and each has their goals andinitiatives Casalino et al. (2015). The Palm Beach Accountable CareOrganization is an example of an ACO, which has made significantadvances in realizing their targets and expanding at an excellentrate. It is located in South Florida and has a total of two hundredand seventy-five participating physicians, and thirty thousandpatients of the Medicare program (Ih-PBC, 2016). The formation of thePalm Beach Accountable Care Organization aimed at using theAccountable Care Organization’s (ACO) principles and ideals toimprove the dispensation of healthcare services to the people ofSouth Florida and reduce the healthcare costs in the region.

ThePalm Beach Accountable Care Organization is run as an IndependentPractice Association. It comprises of doctors who made a decision ofworking together with the aim of providing quality healthcareservices to the people basing on the continuous improvement of worthand focusing on attaining the best outcomes over a prolonged period(Ih-PBC, 2016). The participating physicians laid a strategy for thesuccess of the ACO through diverging from the creation of enormoussetup to focusing on core efforts such as centering on the guidelinesof the Medicare Shared Savings Program. The Palm Beach AccountableCare Organization created an atmosphere for their physicians. Theatmosphere helped them realize that an Accountable Care Model is themost popular tool for the healthcare systems of the modern world. Theorganization’s continued improvement of patients’ healthcaredelivery has earned it an enormous success in the Medicare SharedSavings Program.

Thepayers of this Accountable Care Organization pay through theinsurance providers who liaise with the organization, through acontract (Ih-PBC, 2016). There is also a shared savings program thatenables the providers to co-ordinate and co-operate for the benefitof the patient. Such assists in reducing unnecessary expenses thatmight have been incurred by the patient.

Distributionof payments among the providers in the Palm Beach Accountable CareOrganization is based on a contract signed by the parties involved(Ih-PBC, 2016). After an agreement is reached between the AccountableCare Organization and the insurer, they sign a contract that bindsthem to the agreement. The organization then earns payments which area representation of shared savings that it has attained on medicalspending for a given demographic group. The savings are thendistributed to the member organizations such as the providers, andsome of the money is held for investment purposes. The providers, whoin this case are the physicians, are rewarded with a base salary,productivity incentive, a portion of shared savings and qualitybonus.

Qualityassurance is a fundamental necessity in the provision of healthcareservices, as stated by Shortnell et al., (2010). With such aconsideration, the Palm Beach Accountability Care Organizationemploys the Center for Medicare and Medicaid Services’patients/caregiver experience as a quality measure tool for assessingthe performance of the organization. The device is used to carry outsurveys on patient satisfaction of care achieved by the organization(Shortnell et al., 2010). The tool focuses on aspects such as thetimeliness in the provision of care, communication with theproviders, accessibility to the much-needed services, knowledgesharing, and the patient’s evaluation of healthcare provider (Mora&amp Walker, 2016). A high-performance rating equates to properpatient satisfaction which gives the organization a higher rank andattracts more clients (Shortell et al., 2010). Poor performance, onthe other hand, diminishes the patients’ trust, which may lead to adiminishing number of members.


Fisher,E. S., Shortell, S. M., Kreindler, S. A., Van Citters, A. D., &ampLarson, B. K. (2012). A framework for evaluating the formation,implementation, and performance of accountable careorganizations.&nbspHealthAffairs,&nbsp31(11),2368-2378.

Casalino,L. P., Erb, N., Joshi, M. S., &amp Shortell, S. M. (2015).Accountable Care Organizations and Population Health Organizations.Journalof Health Politics, Policy, and Law,40(4),821-837. doi:10.1215/03616878-3150074

I-PBC(2016). Palm Beach Accountable Care Organization. Retrieved October10, 2016, from

Mora,A. M., &amp Walker, D. (2016). Quality Improvement Strategies inAccountable Care Organization Hospitals. QualityManagement in Health Care,25(1),8-12. doi:10.1097/qmh.0000000000000081

Shortell,S. M., Casalino, L. P., &amp Fisher, E. S. (2010). How The CenterFor Medicare And Medicaid Innovation Should Test Accountable CareOrganizations. HealthAffairs,29(7),1293-1298. doi:10.1377/hlthaff.2010.0453

Paul,D. P., Graves, H., Arroyo, D., Neal, K., Daniel, B., &amp Coustasse,A., (2014, November). Managed care and accountable careorganizations. Northeast Business &amp Economics Association 2014Forty-First Annual Meeting, West Long Branch, NJ.

Managed Care and Accountable Care Organizations

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ManagedCare and Accountable Care Organizations


TheDrawbacks of Managed Care

Managedcare refers to a system of health care whereby patients visitspecified physicians and health centers. There are various types ofmanaged health care plans such as Point of Service (POS), PreferredProvider Organization (PPO), and Managed care in indemnity insuranceplans. Also, there is Private Fee-For-Service (PFFS), IndependentPractice Association (IPA), Health Maintenance Organization (HMO) andManaged Care in a Public Setting (MCPS).The main aim of a managedcare plan is to improve the accessibility of health services to allcitizens at an affordable cost. However, the health care plans havethe following drawbacks

TheDrawbacks of POS

Thedeductibles are often costly even when an individual is visiting anon-network provider (Katz, 2015). Besides, it is even more expensivewhen a person is visiting an out-of-network physician. Furthermore,the premiums paid in the POS cannot be used to consult anout-of-network doctor. Therefore, it might be a waste of money,especially when a patient is required to refer to a specialist who isnot on the POS network. In contrary, most POSs involve consultationswith doctors who are not in the POS system and this forces patient todo a lot of paperwork and incur extra costs.

TheDrawbacks of PPO

ThePPO network requires its clients to fully pay the charges forhealthcare centers and doctors outside the network. Nevertheless, thesystem tries to make it impossible for customers to seek treatmentelsewhere by ensuring that the co-insurance and deductibles arealways high (Katz, 2015).

Thedrawbacks of PFFS

Themain disadvantage of PFFS network is the cost. This system allows itsclients to seek medication from any Medicare or consult a specialistout-of-network without a referral, but at a higher co-payment. As aresult, the network becomes unaffordable to many people (Katz, 2015).

TheDrawbacks of HMO

Inan HMO plan, the deductibles are used to cater for the payment ofdoctors who are on the network only. Therefore, patients are requiredto make a special arrangement whereby they make extra payments whenconsulting a physician out-of-network (Katz, 2015). As a result,members are forced to stick to a primary care doctor. Besides, ifon-network patients seek treatment elsewhere without a referral, thebills are not covered by HMO. Furthermore, the HMO plan is veryrestrictive and the most expensive among all health care plans (Katz,2015). In addition, HMOs tend to offer narrow provider networks so asto mitigate costs. This is a disadvantage since patients may pick aprovider only to notice that the provider is not within his/her area,implying in case of emergencies he/she will need to travel for long.Therefore, HMOs may not be reliable in some instances where emergencycare is required.

TheMajor Features of a Consumer-Driven Health Care Plan (CDHP)

Themain features of a Consumer-Driven Health Care Plan are a personalcare account, a cover that is designed to create a gap between thedollars which are in a client`s account and the point at which adeductible is achieved (DeCenzo et al., 2015). Alternatively, theConsumer-Driven Health Care Plan has designed various internet toolsto enhance better service provisions to patients as well as boostinga friendly consumer involvement. These features help indifferentiating the Consumer-Driven Health Care from other healthcareplans such as Preferred Provider Organization (PPO), Managed Care ina Public Setting (MCPS), and Point of Service (POS) among others. APersonal Care Account (PCA) is vital because it helps individuals tocontrol and manage their medical costs efficiently. Employers usuallydeposit money into an employee`s PCA who can later use the funds topay for doctor`s visits as well as covering any other healthcare thathas been approved (DeCenzo et al., 2015).

TheDifference between a Managed Care Plan, HMO and a CDHP Plan

AHealth Maintenance Organization is a type of a healthcare plan thatis restrictive on the basis of the providers that a patient canconsult (Xiao, 2016). In this regard, individuals with this kind ofinsurance cover are allowed to consult with network physicians.Otherwise, they should cater for their expenses elsewhere, especiallyif they visit out-of-network doctors. The only time that a HealthMaintenance Organization plan allows for an out-of-networkcompensation is during an emergency. On the other hand, theConsumer-Driven Health Care Plan does not restrain on the type ofservice providers that a client should consult (Pagliarulo, 2016).Instead, the plan uses a Personal Care Account (PCA) to ensure thatclients get the best services from providers of their choices. Themoney that is deposited in PCAs can be used widely even in theout-of-network healthcare centers. Besides, the Consumer-DrivenHealth Care Plan covers consultation fees that are used in theout-of-network hospitals. Unlike the HMO, CDHP gives its customersthe freedom to choose the where they want to be treated.

TheConsumer-Driven Health Care plan covers more services than thosecatered for by the Health Maintenance Organization plan (Pagliarulo,2016). Some of the services that are covered by a PCA are lasersurgery, eye exams, dental services, drugs prescription, physicaltherapy, speech therapy among others. The HMO plan mostly includesthe drugs prescription, hospital admissions, emergency rooms visits,and pediatric care.

Thelevel of cost sharing in Consumer-Driven Health Care program isusually higher than in Health Maintenance Organization plan. In theCDHP, cost is shared through a combination of high deductibles andsavings accounts that are tax-advantaged (Pagliarulo, 2016). On theother hand, cost-sharing occurs through co-payments and co-insurance.The CDHP attempts to reduce costs by encouraging their customers toembrace more frugal spending habits. In a co-insurance plan, apatient is expected to pay a portion of his or her hospital bill. Forexample, the HMO plan can decide to pay about eighty percent of thebill and the clients will cover the remaining twenty percent. In casethe charges are about 100 US dollars, the company would pay 80 USdollars while the patient would settle the remaining 20 dollars.

TheFeatures That Enable ACOs to Control Cost and Improve Quality of Care

TheAccountable Care Organizations have the main goal of ensuring thatpatients get services of high quality at the cheapest cost possible(King et al., 2014). The Accountable Care Organizations try tominimize the health care costs by substantially altering the wayhospitals and physicians deliver services. For instance, theAccountable Care Organizations reduce cost by plummeting andpreventing any unnecessary admissions and readmissions to thehospitals. According to the ACO, some admissions are not a must, andthey could be avoided to evade the extra costs. Moreover, theAccountable Care Organizations constrains the health care costs bymaking sure patients visit emergency rooms only when it is a must(Gady et al., 2012). Emergency rooms visits increase the hospitalbills by a significant amount that eventually overburdens thepatients. Furthermore, the ACOs improve the quality of care offeredby physicians through ensuring that the doctors mitigate office-basedcare, as well as employing modern treatment and diagnostictechnologies, in both the hospitals and home care.


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DeCenzo,D. A., Robbins, S. P., &amp Verhulst, S. L. (2015). Fundamentalsof human resource management.Hoboken, NJ: John Wiley &amp Sons, Inc.

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Gady,M., Steinberg, M., &amp Families United for Senior ActionFoundation. (2012). Makingthe most of Accountable Care Organizations (ACOs): What advocatesneed to know.Washington, D.C: Families USA.

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Katz,M. (2015). Healthcaremade easy: Answers to all of your healthcare questions under theaffordable care act.Avon, Massachusetts: Adams Media.

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King,R. C., Rose, R. V., Merritt, M. R., Okray, J., &amp American BarAssociation. (2014). TheABCs of ACOs: A practical handbook on accountable care organizations.Chicago, Illinois: ABA, Health Law Section.

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Pagliarulo,M. A. (2016). Introductionto physical therapy.St. Louis, Missouri: Elsevier.

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Xiao,J. J. (2016). Handbookof Consumer Finance Research.Cham: Springer International Publishing.

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