ADVENT OF MANAGED CARE

The managed care juggernaut has transformed health care. Managed care entails dramatic changes in the organization, financing, and delivery of health services, all in pursuit of containing costs, increasing access to health insurance through greater affordability, and maintaining quality (IOM, 1989, 1997b). The impact has been so profound that the diminishing numbers of providers not governed by managed care are compelled to respond with cost-cutting measures to remain competitive. Enrollment in managed care has burgeoned from virtual obscurity a decade ago to more than 70 percent of working Americans in 1995 (Foster Higgins, 1995). Millions more are covered through Medicaid and Medicare (Retchin, 1997), where the greatest growth in managed care is occurring. In 1996, 13.3 million Medicaid beneficiaries were enrolled in some form of managed care, a fourfold increase since 1991 (Kaiser Family Foundation, 1998). The most common types of managed care are health maintenance organizations (HMOs) and preferred provider organizations (PPOs), in which a group of hospitals or physicians provides services to plan members at discounted rates, or mixes of the two (Gold et al., 1995). In most PPOs and some HMOs, emergency care is provided through contracts with select EDs and trauma centers, whereas other HMOs provide emergency services directly.

Although the configurations of plans vary widely, managed care generally employs a common set of methods to attain the goal of cost containment, including selective contracting, special financing structures through capitation or discounted fees, benefit structures, and mechanisms for monitoring or managing services (IOM, 1996). From the point of view of the trauma patient, the latter is among the most significant because of the "gatekeeping" functions of managed care organizations (MCOs). Gatekeeping typically requires the patient or the provider to seek pre-authorization to receive payment for emergency care. The intent of preauthorization is to discourage ED use for patients who do not require such care. Although it is strictly for payment purposes, preauthorization is often misunderstood as preauthorization for treatment. However, federal law (the Emergency Medical Treatment and Active Labor Act of 1985) requires that all emergency patients be evaluated or screened and, if necessary, stabilized in the emergency room before release or transfer (GAO, 1991).5

What is the impact of managed care on trauma systems? The simple answer is that the full verdict is not yet in, and may never be, because of the dynamic nature of managed care and the difficulty of securing funding for research on its impact. Most of the accusations against managed care surround gatekeeping functions in relation to ED use—accusations that have prompted several states to

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Nevertheless, there is evidence that the denial of payment authorization serves as a powerful incentive for patients to choose to leave the emergency room (Derlet, 1997; Young and Lowe, 1997).



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