Managing changes in reimbursement patterns, Part 1.

S everal rapid changes are taking place in U,S, health care, many of which were introduced by government and the private insurance industry, One change is the movement from fee-for-service to a managed care system of reimbursement. By managed care system I mean an insurance plan that incorporates the features of selective contracting with providers, financial incentives for subscribers to use the network proViders, and utilization review of service, designed to control medical cost. This is in contrast to traditional fee-for-service insurance, which reimburses charges to any provider selected by the patient for any service rendered (within the allowable benefit structure) With the introduction of the contract-based reimbursement, health planning for subscribers has become possible for the first time, The network proVider structure and the utilization review process allow for a more precise needs assessment and the development of special services, Some insurance companies are reserving the term managed care to refer to a system with an even greater level of structure, organization, and service coordination, Such a system is achieved through mechanisms such as aggressive case management of severe illnesses and regional planning for expensive tertiary services, The incentives for subscribers to use the network proVider system (and corresponding penalties for out-of-network services) are even more severe than those under the preferred proVider organizations, The third-party carrier becomes the operator of a closed delivery system, Within the health care industry, this changeover from a fee-for-service Mary Foto