As a community pharmacy owner, you know PBMs, insurance companies and other entities throw around the term “managed care” to describe their businesses. Often, the term gets molded to fit whatever model best suits the entity using the term.
At its core though, “managed care” started as a healthcare ideology meant to best serve patients and the tax-paying population at large. Discover how the term started, how it changed along the way and where it stands today.
History of “managed care”
Historically, the idea of “managed care” dates back to the early 20th century. Early programs operated as sort of co-op health plans for various unions across the United States.
Henry J. Kaiser, a notable early user of a managed care program of his own devising, created a program for the workers building the Grand Coulee Dam in Washington state. Kaiser saw the potential of providing prepaid healthcare programs for his employees and opened his popular plans to the general public.
Conversely, the American Medical Association (AMA) was opposed to these plans and the control they had over people’s choice of providers. The AMA’s efforts during the 1930s and 1940s were mostly successful. Many states created laws that banned plans run by consumers or plans that restricted physician choice, effectively halting the creation of new plans.
It was not until the late 1970s and 1980s that managed care organizations came back into the national spotlight when the HMO Act of 1973 was signed. The act put millions of federal dollars toward the creation of HMOs and employers soon followed suit with their own programs.
Different definitions today
Today, the definition of “managed care” changes according to who uses it and how they use it. The meaning is different when corporate purchasers or directors of healthcare apply it than when pharmacists and physicians use it.
“Managed care” has one meaning to government regulators and another one entirely to patients on the receiving end. For many Americans, the term “managed care” is simply one among many that they associate with their health insurance plans.
Even the United States Department of Health and Human Services (HHS) recognizes the malleability of the term in Peter R. Kongstvedt’s HHS-approved book The Managed Health Care Handbook, saying that, “managed care is discussed more often than it is defined. Perhaps this is because managed care is used variously and eludes clear definitions.” However, Kongstvedt (and the HHS) surmise that “managed care refers, in general, to efforts to coordinate, rationalize, and channel the use of services to achieve desired access, service, and outcomes while controlling costs.” But is that all?
Using the most common present day method to investigate, and the one most likely to be used by your patients, one of the first and most credible definitions to come from a Google search is courtesy of The United States National Library of Medicine (NLM), a division of the National Institutes of Health (NIH).
The lengthy but encompassing explanation from the NLM states that managed care programs are:
“…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; the establishment of cost-sharing incentives for outpatient surgery; selective contracting with health care providers; and the intensive management of high-cost health care cases.”
While that definition may ring true to the ideology of what “managed care” should do, it isn’t a complete picture of how the term is used today.
The term “managed care” has been snatched up by the pharmaceutical benefit management (PBM) industry today. PBMs have linked the term “managed care” with their businesses as a way to entrench their businesses in the healthcare model and also to signify to unknowing consumers that their businesses in some way take part in providing patient care, when they are not healthcare providers.
What’s missing from the definition?
The various definitions and explanations of “managed care” tend to leave out the most commonly agreed upon principle of pharmaceutical healthcare management: If patients correctly take their prescribed medications for their particular disease state(s) and if they adhere to the proper medication therapy protocol and if they have their medication therapy monitored correctly, then patients have a much greater probability of avoiding the need for acute or palliative care.
In other words, if patients take the right medicine and they take it properly, then they will stay out of the hospital, which will, in turn, cut down on both short-term and long-term medical costs—or the defining points of “managed care”.
What’s missing from the definition of managed care is the vital role of the pharmacist in the “managed care” healthcare model. Too often PBMs try to shut pharmacists out of the healthcare process—by slashing their reimbursements, by moving their patients to mail order, by implementing costly administrative fees—when what community pharmacists do is actually at the core of what PBMs’ “managed care” businesses are supposedly about.
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