Question

What methods have managed care plans used to limit their enrollees’ drug costs?

Answer 1

Managed care organizations emerged as nonprofit organizations to reduce health‐care costs and provide broader coverage. Managed care organizations are groups of physicians, specialists, and often hospitals, coordinating with each other to provide care for a set monthly fee. These systems control the patient's access to doctors, specialists, laboratories, and treatment facilities. HMOs hire physicians as salaried employees rather than paying them on a fee‐for‐service basis. In this system, the medical clinics receive the same amount of money regardless of how frequently patients see the doctor. Because no connection exists between services rendered and fees paid, the incentive is to keep costs down. Critics of this system point out that business managers or non‐medical personnel trying to hold down costs frequently overturn medical decisions made by doctors.

Although begun as nonprofits, most managed care systems are for‐profit, and many hospitals are now for‐profit, introducing a strong profit‐motive (not just a hold‐down‐costs motive) throughout the system. Members of managed care organizations can only visit approved doctors and stay at approved hospitals and get approved tests. They cannot see other doctors or even specialists within the managed care system without an okay from a primary care physician, who is incentivized not to make such recommendations. The blatant profit motive in many cases accounts for patient distrust of the system and dissatisfaction from everyone involved except for high‐salaried system administrators and CEOs. Other issues include replacing highly trained nursing and physician staff with lesser trained assistants to save costs, overuse of emergency rooms, a growing shortage of hospital beds for critically ill patients, hospice and home health care, and the provision of follow‐up social services to patients.