Expiration Date: December 1, 2000. No CE credit will be given after this date.
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This Nursing Continuing Education Independent Study Modular Program is made possible by Kent State University in partnership with the American Nurses Association. Table of Contents
Since the failure of national health care reform proposals in 1994, the major drivers of health care restructuring have been unbridled competition and corporatization in the industry, and the unprecedented growth in managed care. Cost-containment, effected in large part by managed care, has caused hospitals and health systems to radically and rapidly reconfigure how they structure and provide care. Health care purchasers -- including large employers, and state and federal government programs -- seeking to lower their costs have increasingly turned to managed care contracts as a solution. In response, many hospitals, already struggling to compete in over-bedded environments, sought to obtain these lucrative managed care contracts by deeply discounting the prices for their services, hoping to underbid their competitors. As a result, hospitals frequently focus on achieving needed savings by reducing labor costs through work redesign and through substitution of lower-paid unlicensed assistive personnel (UAPs) for higher-paid personnel, including registered nurses (RNs).
There is no doubt that as hospitals continue to take licensed beds out of service in response to reduced demand in over-bedded communities, there will be some reductions in the number of positions in all job categories, including registered nurses.
Unfortunately, most of the RN layoffs now occurring are not true job reductions due to over bedding, but simply job substitution, instituted by hospitals to reduce labor costs and increase cash reserves (Huntington, 1995). Recent surveys of registered nurses provide many anecdotal accounts of the negative effects of downsizing on patient care and working conditions (ANA, 1994; Shindul-Rothschild, 1996). The results of these surveys lead the reader to conclude that many hospitals are engaging in cost-cutting practices that endanger patient safety and quality of care for the sake of profits.
The most recent of these is the 1996 American Journal of Nursing (AJN) Patient Care Survey, conducted by Judith Shindul-Rothschild, RN, CS, PhD, and commissioned by AJN in collaboration with ANA The survey, conducted March through June 1996, was designed to investigate nurses' perceptions of the safety and quality of patient care currently being delivered. Just released, the AJN survey of 7,560 registered nurses provides a comprehensive overview of nurses' perceptions of the
effects of downsizing, restructuring, and the use of UAPs upon the quality of patient care and RN employment conditions.
Key findings of the AJN survey:
Even with these most recent survey results, the full impact of these changes on the quality and safety of care is difficult to document and evaluate. Most of the needed data are not publicly reported, and remain in proprietary databases of hospitals or managed care plans. As a result,
health care quality in managed care plans and hospitals is subject to increased scrutiny, not only by the nursing profession, but by regulators and the public as well. Some question whether the current configurations can truly be called managed "care" or whether they are simply managed "cost."
Thus, the question: Is managed care, as it is often proclaimed, a panacea for the nation's health care system, effectively controlling costs and providing preventive approaches and early interventions to millions who would not have benefited from these strategies under traditional indemnity plans? Or is it, as others claim, a Pandora's box, destined to erode quality of care by cutting too many corners?
Today, the term "managed care" encompasses a wide variety of organizational arrangements -- HMOs, PPOs, IPAs, PSOs, PHOs, IDNs (Integrated Delivery Networks) and, as Leah Curtin, Editor of Nursing Management, once described them, "OWAs" (other weird arrangements). In its most basic form, managed care is an insurance concept that joins the financing and the delivery of health care services to covered individuals under a single corporate entity, most often by arrangements with selected providers (ANA, 1995). Prior to 1980, most managed care arrangements were large group-practice Health Maintenance Organizations (HMOs), such as Kaiser Permanente (See http://www.kaiserpermanente.org) and the Group Health Cooperative of Puget Sound. (See http://www.ghc.org.)
HMOs had their origins in the labor movement of the late 20's and 30's, when unions and employers tried to provide new benefits attractive to workers. The oldest HMO still in practice is Ross-Loos in Los Angeles, founded in 1929. After World War II, many of these prepaid plans, like Kaiser Permanente, opened their membership to the public. In 1973, the Health Maintenance Organization Act was passed by Congress, requiring employers who offered health insurance to also offer a managed care HMO option if a qualified HMO was available.
Today, MCOs are systems that offer a package of health care benefits, explicit standards for the selection of health care providers, formal programs for ongoing quality assurance and utilization review, and significant financial incentives for its members to see providers and procedures associated with the plan. (ANA, 1995). Managed care is usually financed by a "capitated" or prepaid mechanism, which means that a
stipulated dollar amount is established to cover the cost of health care delivered for a person and is paid (usually monthly) to a health plan or specified health provider. The plan/provider is responsible for arranging the delivery of all health care services required by the covered person
under the terms of the contract (ANA, 1995). MCOs make money when they are able to provide all of the needed services to health plan members for less
than the aggregate capitated payment. MCOs and providers are said to be "at-risk" in that they must absorb any costs of care delivered that exceed the capitated payments to the plan.
As we have seen, there are many different forms of MCOs. Under the Federal HMO Act, an entity must have three characteristics to call
itself an HMO: 1. An organized system for providing health care or otherwise assuring health care delivery in a geographic area; 2.An agreed-upon set of basic and supplemental health maintenance and treatment services; and 3. A voluntarily enrolled group of people. May & Shaeffer, (1995) in Nurses Mastery of the Managed Care Environment describe several of these forms:
There are four basic models of HMO's: group model, individual group association, network model and staff model. Recent changes in the
marketplace have blurred the distinctions among these models, but they help illustrate the structure and incentives in managed care. Currently there are more than 500 HMOs in the United States:
Newer forms of managed care include Physician-Hospital Organizations (PHOs) and Integrated Delivery Networks (IDNs).
In 1992, ANA and 73 specialty nursing organizations developed and endorsed a comprehensive plan for health care reform called Nursing's Agenda for Health Care Reform. A
cornerstone of the plan was the development and appropriate use of a managed care as a system that nursing called "organized delivery systems." Nursing envisioned an organized delivery system as a managed care system that would provide universal access to a defined standard package of essential health and treatment services, encompassing a balance between treatment of disease, health promotion and illness prevention. Additionally, the organized delivery system was seen as one that :
The "organized delivery system" envisioned in Nursing's Agenda for Health Care Reform is strikingly similar to the "integrated delivery networks"described in the American Hospital Association's (AHA) 1995/1996 Environmental Assessment. However, as the AHA notes, these types of evolved systems are a rarity in today's managed care market, existing only in fully integrated markets such as Minneapolis (Gerstein, 1995).
1994, more than fifty-five million Americans (21% of the US population) were enrolled in managed care HMOs. Within this group, 9 million had access to PSO options (United HealthCare, 1996). This number included 67% of the employees of large firms. Additionally, about 79 million workers and their dependents had access to PPOs. Some 23% of Medicaid beneficiaries, and 9% of Medicare beneficiaries, were also in managed care plans.
Managed care industry experts predict that growth in enrollment in managed care plans will continue at a rate of 10% or more for the next several years, and that by the year 2000, more than 80% of the US population will be receiving their health care in a managed care environment (Ladden, 1996).
The surge of interest in managed care is based in large part on dual assumptions: that managed care plans will lower costs for payers and consumers; and that quality can be maintained in a cost-effective environment. However, fulfillment of these assumptions is proving
to be problematic for consumers, providers, and the industry (May &
Shaeffer, 1995).
Consolidation and restructuring of the health care industry and the subsequent utilization of managed care strategies exist along a continuum. According to the AHA Environmental Assessment, managed care markets will continue to evolve through phases, commencing with discounted fee-for-service, moving to market-driven financing and delivery, and ultimately to true integration. AHA notes that each market is different, and will proceed faster or slower, depending on local conditions and in some regions, market conditions may stabilize without ever reaching a fully-integrated model. They predict that eventually there will be, at most, 10 competitors in any region, with market shares ranging from 10 to 30 percent (Gerstein, 1995).
As IDNs evolve, they will produce more mergers, not only in the provider community, but between provider-insurers and insurers themselves (Gerstein,
1995). Many hospitals have already launched their integration efforts by consolidating among themselves. More than 650 of the nation's hospitals were involved in mergers or acquisitions in 1994, or 10 percent of all hospitals in the country. About half were the result of investor-owned firms' mergers; however, 301 other hospitals were involved in 176 deals during 1994, excluding hospitals merely affiliating (Gerstein, 1995).
This trend toward corporatization and consolidation is perhaps best represented by examining the aggressive growth of Columbia/HCA, Inc. In only seven years, Columbia/HCA grew from two Texas for-profit hospitals to an international health care delivery system of more than 330 hospitals in 37 states and two European countries, nearly 150 ambulatory surgical centers and a variety of other tightly-integrated services (Heineccius, 1995).
This was accomplished by acquisitions of smaller proprietary hospital chains and by partnering with nonprofit hospital systems. Columbia/HCA has achieved cost-savings through vertical integration of all local medical services and creation of successful partnerships with physicians; volume purchasing discounts; exclusive supplier partnerships; refinancing of hospitals long-term debt at more favorable rates; eliminating excess capacity and duplication of services; and significantly reengineering operations, including nursing services (Heineccius, 1995). Wherever Columbia/HCA has entered the market, competitor hospitals have rapidly moved to consolidation and other alliances, giving rise to intense competition over prices and positioning for lucrative managed care contracts. The effects of this kind of market volatility and aggressive competition have far-reaching implications for consumers and nurses alike.
The rapid and continued growth of managed care has produced a wide range of important public policy issues and choices. Decisions made in the public policy arena will have either positive or negative implications for nursing. If nurses are to control their own destiny, it is essential that they fully understand and appreciate the linkages between public policy, nursing practice, and their own workplace employment conditions. Managed care prompts public policy debate and decisions on issues of critical importance to nurses, including: 1) Access, cost and quality of care; 2) Licensure and regulation; 3) Employment opportunities and conditions; 4) Educational preparation; and 5) Ethical issues.
Nurses have historically been advocates for access to quality, cost-effective health care services for all people. Lack of insurance coverage causes people not only to avoid preventive care, but to delay seeking illness care until later into the episode of illness. Frequently this avoidance or delay increases the costs of care for an illness that could have been treated earlier, often in a less expensive setting, or the need for care avoided altogether.
Additionally, the increase in the number of uninsured not only represents a barrier to appropriate, timely care, but it also creates pressure on the system to absorb the costs for this uncompensated care. Historically, hospitals and other providers have provided uncompensated care by "cost-shifting" the charges for this care onto paying patients -- in other words, charging privately insured and self-paying patients more to offset the hospital's loses for uncompensated care and the underpayment by Medicaid and Medicare. Under capitated arrangements or deeply discounted
fees-for-services, this option is not as readily available. Providers, especially hospitals, then look for ways in which to reduce their operating costs, through such strategies as downsizing, work redesign and substitution of less expensive personnel. Nurses must continue to be actively involved in advocating for insurance coverage for all people.
Despite the rapidly growing managed care sector, the percentage of US workers covered under employer-sponsored health plans dropped from a high of 77.7% in 1990 to 73.9% in 1995. It is expected to drop even lower -- to 70.4% by 2002 according to a study recently released by the Lewin Group, a Washington-based health care consulting firm. The study estimates that the
number of uninsured Americans will increase to 45.6 million by 2002, an increase of more than 5 million since 1994 (Auerbach, 1996). Additionally, many companies that provide employer-sponsored plans have increased premiums for family coverage which may help explain the decline in dependent coverage (from 83% in 1989, to 78.9% in 1995). ANA has strongly supported legislation at the state and national levels to prevent further erosion of these benefits.
The 1995 proposal of the Republicans in Congress to reduce the Medicare and Medicaid programs by $450 billion over seven years would have devastated the quality of patient care, both because of the proposed structural
changes in the programs themselves, and because there no longer would be adequate funding to pay for acceptable care. In the wake of the 1996 elections, issues of cost will receive as much, if not more, limelight than issues of quality, especially as revised predictions of Medicare insolvency
are revealed. ANA and organized nursing must remain among the leaders in defending quality of care in both Medicare and Medicaid.
Advocates for mental health care have raised widespread concern about the practice of many managed care companies that provide more limited coverage for treatment of mental illness than for physical illness. In 1996, Congress approved language that to provide minimal parity in coverage of mental illness, scaling back the more comprehensive language that had been
approved in the Senate (the Senate bill was strongly supported by ANA). Clearly, increases in crime, homelessness, suicide and other social problems are not due solely to lack of access to mental health services; but without ready access to mental health treatment options, those afflicted by such problems face a bleak future.
Many managed care plans have required some form of preauthorization for emergency room visits and have disallowed payment for non-emergency conditions. Of course, many patients seek emergency treatment for what they believe to be life-threatening conditions that turn out to be more benign--as in the patient who is experiencing chest pain that turns out to be indigestion. Several states have seen efforts to enact legislation to require coverage of services under a "prudent layperson" standard -- in other words, services will be covered if an average person, having an average knowledge of health care, would have sought emergency treatment under the same circumstances. This issue is likely to be introduced early in the 105th Congress; in fact, the American College of Emergency Physicians (ACEP) and Kaiser-Permanente have already agreed upon principles for legislation on this issue. ANA has supported this type of legislation in
the past and will continue to do so.
The fastest growing segment of managed care is the Medicare Managed Care program. HMOs have been contracting with the Medicare program for two decades to provide services to Medicare beneficiaries under what is commonly referred to as Medicare risk-contracting.
HMOs receive payment equal to 95% of Medicare's average cost of treating a Medicare beneficiary under a traditional fee-for-service arrangement. Some critics have suggested that this practice has actually increased, not decreased, costs to the Medicare program, as Medicare risk-contract programs typically attract younger, healthier Medicare beneficiaries -- who cost the
contractor much less -- leaving older and sicker patients in fee-for-service Medicare, thus driving up the average cost of treating beneficiaries under fee-for-service and, in turn, driving up payments to Medicare risk contractors. This debate is likely to grow more heated, particularly as
Congress and the Administration examine what steps to take to ensure the viability of the Medicare program as a whole.
Consumer concern has also been sparked by the discovery of "gag" rules that prevent physicians or other providers from revealing a full range of treatment options to patients or, in some instances, from revealing their own financial self-interest in keeping treatment costs down. Nursing has long advocated for patients' rights to have access to full information about their condition and their treatment options. Several states were successful in their efforts to outlaw "gag" rules. (See information in State Government Affairs area in NursingWorld.) However, in some instances, legislation has been limited in scope to physician communications. Nursing has made it a priority to ensure that other providers, including nurses, and their patients are also protected from the imposition of "gag" rules.
One managed care practice that effectively galvanized consumer interest has been some managed care organizations' imposition of arbitrary "caps" on the length of hospital stays for specific conditions. The most prominent example is that of allowing only a 24-hour stay for normal childbirth, but there are many examples of limits placed by managed care organizations
on treatment options or duration. Some managed care organizations have recently begun requiring that mastectomies be done on an outpatient basis.
Health professionals and consumers alike have expressed concern over the potential impact of placing rigid limits on hospital stays. Increasing consumer concern led to successful efforts in several states to require payment for a minimum of 48 hours for normal childbirth, and a longer stay for Caesarean sections. (See information on 1996 legislation in the State Government Affairs section of Nursing World).
The 104th Congress eventually passed legislation to prevent premature discharge policies. ANA and other nursing organizations supported such legislation, along with proposals to ensure access to nursing care in the home and other appropriate follow-up.
Efforts to guarantee minimum hospital stays require careful consideration by nursing. Nurses have long advocated for the availability of treatment in non-hospital settings -- in communities, in the home, in schools and workplaces. The assumption that all safety concerns are allayed by a longer hospital stay is not always valid. In the case of normal childbirth, many mothers prefer not to have any hospital stay at all -- they opt to give birth at home, often with the assistance of a certified nurse-midwife -- and nursing has supported their right to make that choice. Patients should be offered appropriate, safe, and cost-effective options for care, not confronted solely by arbitrary caps on hospital treatment without alternatives or appropriate follow-up care and education. ANA and state nurses associations sought to shape legislation on short maternity stays to ensure that appropriate follow-up care in the home was also made available upon discharge.
Since November 1994, there has been an "anti-regulatory" trend in public policy in the United States. The defeat of federal health reform, paired with the subsequent election of the Republican majority in Congress, heralded an abrupt turn toward reliance upon "the market" to regulate
health care. Efforts to secure new regulation of health care at the state and federal levels were put on hold. But in 1996, in response to continued public concern, Congress passed the Kassebaum-Kennedy bill, providing a limited expansion of access to, and portability of, health insurance. Additionally, regulation of the "drive- through deliveries" and HMO "gag" rules became a focus of Congressional attention.
Growing concern about safety and quality of health care services and increasing examples of excesses by managed care organizations have contributed to a heightened public willingness, and even a demand, for government intervention into some aspects of health care. Whether this trend
continues, and how far will it go, remain to be seen. But there are indications that the federal government is increasingly concerned about the percentage of market share that some of the larger managed care systems and for-profit corporations are able to capture, raising questions of antitrust. The potential for one corporation to dominate a given market raises concerns about the potential for unilateral changes to benefit structures and price-fixing, which could seriously harm consumers and providers alike. This possibility has clearly shattered the assumption that government will bow out of health care for any extended period of time.
Efforts to regulate managed care organizations and other insurers have met some success in state legislatures, but they have been limited in their effect. This is because self-insured plans, which often insure a substantial proportion of state residents, are exempted from the effect of state regulation. The federal Employee Retirement Income and Security Act (ERISA)
preempts most state measures to regulate self-insured plans. This has made activity at the federal level even more important. For example, state legislation on short maternity stays did not apply to self-insured plans because of the ERISA preemption. The federal legislation passed by the 104th
Congress, on the other hand, applies to all insurance plans, including self-insured plans.
As managed care systems and corporate mergers consolidate more and more across state lines, the difficulties posed by different state licensure laws and regulation become increasingly evident. These difficulties are glaringly apparent in the filed of telehealth where technological advances now allow practitioners to evaluate and treat patients in rural and remote areas. The
Pew Commission Task Force on Health Care Workforce Regulation has joined the chorus of those advocating that policy makers reconsider traditional licensure laws. (See information on 1996 legislation in the State Government Affairs area of Nursing World.)
Individual licensure exists to protect the public and assure that the practitioner is directly accountable to his/her client. Over the years, nursing has fought to preserve individual licensure and protect the scope of nursing practice, often in the face of strong challenges by state affiliates
of AHA and AONE. These associations advocate expansion of the licensed institution's authority to determine the scope of practice and assume accountability for their employees' actions (i.e., institutional licensure). It is likely that these challenges will increase as hospitals form new
alliances with multi-state, mega-managed care systems, seeking to gain consistency in the scopes of practice of their employees and allowing them to easily utilize the same practitioners to provide telehealth or direct care to clients in more than one state.
During the health care reform debates of 1994, organized nursing supported a move toward national licensure laws, not institutional licensure. The advantage of a national individual license would be that variations among the state practice acts, especially governing the practice of advanced practice registered nurses (APRNs), could be addressed federally rather than state by state. National licensure would also preserve individual accountability of the practitioner to his/her client rather than to the employer. Organized nursing will need to remain vigilant and consistent in its efforts to protect individual licensure laws, both at the state or national level.
As we have seen, hospitals increasingly substitute UAPs for RNs as a cost-saving strategy. As this practice has increased, not only in acute care but in other settings as well, many state boards of nursing and state legislatures are considering methods to regulate these unlicensed providers. This has fostered debate about appropriate supervision and delegation by registered nurses. While each state is unique in its approach, concerns about the effect on quality and safety of patient care are universal. A coordinated and consistent approach to these issues is essential to
prevent erosion of the scope of nursing practice on a state-by-state basis. Many states are already considering changes to state nurse practice acts. (See information on 1996 legislation in the State Government Affairs section of NursingWorld.) Some activists believe that direct regulation of UAPs will help ensure
safe care through standardization of training, utilization, and allowing RNs to delegate. Others believe that to legitimatize UAPs is a detriment to both patients and registered nurses, and will serve only to lower quality and jeopardize safety. This debate must be resolved to assure a consistent legislative and regulatory approach nationally. ANA convened a working group in January 1997 to delineate a comprehensive position on regulation and utilization of UAPs.
Frenzied consolidation of the health care industry, positioning for sudden changes in regional markets, and increasing competition for managed care contracts have led many hospitals to seek aggressive cost-containment measures even though the data confirm that their financial reserves are stronger than ever (Gerstein, 1995). Hospitals want to ensure that they can absorb any short-term financial adjustments needed to offset revenue losses due to deep discounting for new managed care contracts and that they have sufficient revenues for advertising and promotion. Additionally, they want to be able to fund mergers, acquisitions, and other new business arrangements that may become (or appear) necessary in quickly changing
markets. Hospitals in the for-profit sector are also under pressure to ensure high levels of return for their investors. As we have seen, these efforts have led to major downsizing, reengineering and job redesign, including cross-training and substitution of cheaper, minimally trained workers for higher paid professionals -- especially registered nurses.
If the actuarials are correct and between 200,000 and 400,000 hospital beds eventually are eliminated, the impact on RN jobs in hospitals will be substantial. Currently, the hospital industry reports RN staffing at about 1.1 RN per licensed, occupied bed per 24-hour period. These two statistics, when taken together, have led some policy makers to conclude that there
will eventually be a reduction in the hospital-based RN workforce of between 220,000 and 440,000 jobs (PEW, 1995)
When the managed care market matures to the point where managed care systems compete not only on cost, but on quality of care as well, the demand for RNs will increase. However it is unlikely that the new job opportunities will be created one-for-one to fully offset the number of jobs lost due to the elimination of hospital beds as the industry continues to consolidate.
Nurses will need to acquire new skills to assure their marketability in the future. Acquiring and using new information systems and technology will become an essential skill for the nursing workforce. The current nursing workforce will need training and education to stay current of these new technologies
Many managed care organizations now place an almost exclusive emphasis on cost containment. This is a far cry from the original goals of managed care -- provision of coordinated, seamless services that emphasize prevention and primary care. However in the more integrated and consolidated markets, as managed care price reductions approach their limit, patient satisfaction,
provider access, and documentable quality are expected to take center stage (Gerstein, 1995). Many nurses are already identifying important new
opportunities to help achieve those goals, as well as creating new roles for nursing. According to=0D the AHA 1995/1996 environmental scan, the greatest health care employment opportunities will be in nonacute care settings, such as home care, primary or custodial care, and case/care management (Gerstein, 1995).
Managed care organizations that value quality and recognize the importance of prevention, wellness, and early intervention can benefit greatly from nurses' expertise in a variety of roles. In turn, nurses can help guide managed care to focus on providing a full range of quality,
cost-effective services. In addition to jobs in the more traditional institutional settings such as hospitals, ambulatory, and long term care facilities, some of the fastest growing roles for nurses in managed care include jobs in home care, case management, risk management, patient advocacy, patient education, benefits coordination, and provider liaison (ANA, 1996). Two of the fastest growing areas of job opportunities for nurses are:
Perhaps the most widely identified role for nurses in managed care is that of the primary care provider, the gatekeeper to the rest of the system. Many HMOs already utilize APRNs as primary care providers. Managed care's emphasis on primary care and health maintenance, the current shortage of primary care physicians, and growing chronic care needs are propelling other job opportunities for APRNs and physician assistants (PAs). Managed care corporations are recognizing that APRNs can increase patient access and compliance, are less costly to employ than physicians, and are effective in patient-centered care coordination. They are increasingly accepted by both patients and physicians, so much so that the U.S. Department of Labor predicts a 36 percent increase in these jobs through 2005 to accommodate growing demand. APRNs can provide 60 to 80 percent of basic services performed by primary care physicians (DOL, 1996). Furthermore, according to AHA, more than half of all HMOs are planning wider use of mid-level providers to cope with the primary care physician shortage (Gerstein, 1995).
Opportunities for experienced registered nurses also exist in the rapidly growing area of telehealth, or "demand management services," as it is frequently called in managed care. MCOs increasingly turn to telephone triage and on-line health advice services to reduce members' avoidable visits to health providers. According to the MCOs, this not only helps reduce unnecessary costs, but contributes to better outcomes by helping members become more involved in their own care. Historically, demand for outpatient health care has been largely unmanaged. According to Michael Wood, a consultant with William Mercer, Inc., in Seattle, "The objective of demand management is to help people stay well and obtain the appropriate level of high quality care. Cutting costs is a natural benefit of it." (Bureau of National Affairs, 1996). Consumer satisfaction is also reportedly very high. As a result, MCOs are either buying a demand management program from a vendor or building their own, thereby creating jobs for experienced nurses. Wood advises his clients that nurses must have at least five years' experience in order to bring clinical judgement to each call. For example, Informed Access Systems, Inc., one of several national demand management vendors, employs more than 100 registered nurses -- up from 15 two years ago. The company now handles more than 1 million calls annually and continues to grow rapidly (Bureau of National Affairs 1996).
According to AHA, demand management will receive greater attention in the future, focusing on reducing utilization through programs that support health and medical self-care. About six million people have access to 24-hour telephone health information and counseling services, which coach consumers through care options. "Electronic house calls" that extend health care beyond the borders of physicians' offices are provided by growing numbers of services (Gerstein, 1995).
The nursing community continues to express concern about some managed care organizations' pattern of excluding APRNs from provider panels. This has the effect, of course, of preventing APRNs from serving as providers for patients enrolled in those managed care organizations. APRNs in some markets have won the opportunity to be managed care providers -- whether through educating the managed care plan administrators, organizing consumer demand, seeking legislation, or other means.
During the 103rd Congress, many non-physician provider groups sought legislation (in conjunction with comprehensive federal health reform efforts) to prevent managed care organizations from excluding whole categories of health care professionals from participating as providers. These efforts were unsuccessful, but provided an opportunity to educate policy makers about the issue of exclusion of classes of health care professionals. These efforts should not be confused with efforts to secure "any willing provider" legislation. "Any willing provider" measures seek to prevent managed care organizations from excluding individual health professionals or providers who are willing to participate as providers, and to accept the managed care organization's conditions for participating. Physician groups, pharmacists, and others have actively sought such measures in many states, often successfully. What nurses have sought, by and large, is legislation to prevent the exclusion not of individuals, but of whole professional categories.
While nurses generally support calls for equal pay among professionals for the same services, some managed care plans may consider this a disincentive to hire nurses if they can hire physicians at the same rate.
While hospitals continue to employ two-thirds of the practicing nurses, and will probably continue to be the largest employment setting for nurses for some time to come, new opportunities exist in managed care and in alternate settings, such as nursing homes, community/home/public agencies, and schools. As more nurses find themselves employed in a managed care work setting, adequate preparation for the unique elements of such an environment must be addressed. To appropriately prepare and retrain acute care nurses for new roles in community care, continuing education and undergraduate nursing programs need to develop curricula that include the essential skills necessary to function competently and effectively in new managed care roles and settings.
ANA has developed a Managed Care Curriculum for Baccalaureate Nursing Programs, funded by a grant from the American Nurses Foundation and Aetna Life and Casualty (Hart, 1995). Copies of the curriculum were distributed to all university schools of nursing and the State Nurses Associations. This six semester-hour course is designed to prepare nurses to function effectively and efficiently in beginning leadership roles in a managed care environment.
Didactic content includes community-based nursing practice, the philosophy of managed care, technology and managed care practice, prevention, health promotion strategies, client and provider accountability, risk management, sensitivity to health costs, quality improvement, risk management, marketing and interdisciplinary collaboration. Practicum includes computer knowledge and skill development, clinical practice, mentoring by experts, performance assessments, quality assessment and analysis, cost accounting and analysis, interdisciplinary team activities, and generation of and participation in staff development programs.
As managed care systems assume a larger role in health care, it is important that nurses strive to promote and preserve the ethical precepts of the profession and remain committed to the delivery of compassionate, competent, respectful and responsible care. Nurses repeatedly express concern over the impact of managed care and restructuring on the quality and safety of patient care, and the difficulty in fulfilling their advocacy responsibilities to patients. The obligation to safeguard patients and minimize harm is greatly challenged in the present health care environment.
The increasing profitability of managed care organizations, and the rising salaries of their top administrators, are major ethical issues for consumers, nurses and other providers. Managed care organizations and health care institutions assert that cost-control must be an increasing priority,
and that the advantage of managed care is its ability to provide care more efficiently and cost-effectively. One could question whether, in an environment in which everyone is asked to share the economic burdens of health care delivery, there is room for increasing profiteering and
for outrageously high administrative salaries? Why should deal-making in the health care industry yield bonuses in the millions of dollars? Why are these savings not shared with the plan participants in terms of either enhanced services or reduced premiums? How can these abuses be reconciled with the
continual claims for harsher austerity measures, including nurse layoffs, in the health care industry?
These questions may be sardonic, but they help to make a point. This is an industry out of control, in which nurses and consumers alike are told to make do with less, by a system that is making a people into millionaires many times over. Is this what we want in a health care system?
Managed care organizations have examined means to provide professionals with financial incentives to keep costs low. Some have offered physicians bonuses for keeping expenses down or limiting referrals to specialists. Some HMO-run hospitals have experimented with compensation systems that reward lower expenses or higher levels of patient satisfaction. ANA has expressed its concern with providing financial incentives to limit care.
Nursing has long recognized the value of ensuring more efficient, less wasteful use of resources. What indicator can be used to separate legitimate efforts to use resources more efficiently from those that provide nurses (or others) with a financial stake in withholding care? This question gains significance for the nursing profession as new approaches to compensation
continue to emerge. ANA continues to work to provide guidance in assessing these new compensation systems.
These are just a few of many important policy issues raised by managed care. ANA has placed high priority on addressing the impact of managed care on the quality and safety of health care and the impact on the employment opportunities and working conditions of registered nurses. ANA's Congress on Nursing Practice has convened a workgroup of nurses with expertise in existing managed care regulations and current operations, to review the National Committee on Quality Assurances (See http://www.ncqa.org) accreditation process for managed care organizations as well as all other pertinent regulations. The committee is charged with identifying nursing's recommendations for the essential elements of managed care regulation, and preparing a policy briefing paper that will identify areas not addressed in current regulations.
There are signs that the public is also beginning to raise serious questions about managed care practices. According to the Princeton Survey Research Associates, a Princeton-based polling organization that conducted a recent national survey (See http://www.nursingworld.org/pressrel/1996/survey.htm) for the American Nurses Association (ANA), of 1,001 American adults polled, as many as 75% indicate serious concern that the quality of patient care is being diminished by cost-cutting practices -- a concern that has increased significantly since 1994.
75% of the survey respondents believe that reducing the number of registered nurses who provide bedside patient care in hospitals lowers the quality of care, and 67% said that increasing the use of unlicensed health care workers for care traditionally performed by registered nurses has the same quality-diminishing effect. Americans want information about the level of nursing care in hospitals, but many feel that it would be difficult to obtain. Eighty-two percent of those polled want to know the average number of patients assigned to each nurse, and 80% want to know the hospital's policy on types of care Unlicensed health care assistants are allowed to
perform.
Public education campaigns at the state and local level, similar to ANA's national "Every Patient Deserves A Nurse" campaign, and news reports of significant problems with patient safety and quality of care in hospitals are on the increase. More than 500,000 "Every Patient Deserves A Nurse" brochures have been distributed across the country resulting in countless stories in local and national print and broadcast media, including the Pittsburgh Post-Gazette, the Los Angeles Times, the Washington Post, Newsweek, Time, CNN, CBS Evening News and the New York Times. As a result, complaints from consumers are beginning to have an effect on public policy. The New York Times has reported that over the last 18 months, at least 34 states have
outlawed or curtailed methods that many HMOs have used to shorten some types of stays, discipline physicians or keep patients in the dark about incentives and ground rules of managed care. According to the National Conference of State Legislators, more than 400 bills affecting managed-care practices were introduced in state legislatures in 1996.
It is essential for organized nursing to work effectively to build broad coalitions rather than work from a singular or exclusive point of view and, at times, to be willing to move ahead in steps rather than in leaps. In California, two very similar statewide initiatives aimed at strictly
controlling the managed care industry were narrowly defeated -- primarily because the two major proponents (the California Nurses Association and SEIU) couldn't agree on a single initiative and, as a result, split their votes and were out spent in the public campaign by their managed care
industry opponents.
However even with the progress at the state level, action on the federal level will be required to affect the large ERISA self-insured employer plans which are exempt from state insurance laws. ANA initiated federal legislation in the 104th Congress and will have it reintroduced when the 105th Congress convenes in January. The Patient Safety Act of 1996" (HR 3355) (See http://www.nursingworld.org/pressrel/1996/patsafe.htm) introduced by Representative Maurice Hinchley (D-NY) calls for public access to information about nurse staffing and care givers' qualifications, "whistle blower" protections for nurses who speak out on behalf of patient care issues, and review of the impact of proposed mergers and acquisitions of health care institutions on patient health and safety.
A review of the nursing literature, including ANA's House of Delegates reports over several years, reveals widely differing views on whether the rapid spread of managed care will ultimately have a positive or negative impact on the nursing profession. This is because managed care exists
along a wide continuum, encompassing a broad range of capitated and discounted health systems with wide variations in individual health plans practice patterns. It is important to recognize trends as they develop, whether toward greater recognition for primary care nurses, or toward compromises in safety and quality. ANA has produced a number of materials that offer more analysis and viewpoints on managed care, including prominent articles in both the June 1995 and October 1996 issues of The American Nurse.
The articles contained in this issue of the Online Journal of Nursing Issues are intended to raise a number of the controversial issues surrounding the evolution and practice of managed care. It is hoped that readers will respond with letters to the editor and authors stimulating even further discussion and debate on this important topic.
In the meantime, the way for nurses to have a part in shaping the future of health care is to belong to their ANA constituent state nurses association and to work directly with managed care insurers, providers, and consumers to educate them about how nurses are the most cost-effective
health care professionals that provide quality patient care. The profession must analyze and evaluate current and future roles for nurses, document the quality and cost-effectiveness of nursing services, identify the link between nursing action and patient outcomes and work together to affect public policy at the federal, state and institutional level.
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There are many excellent references for managed care terminology. The following list of definitions was adapted from several sources, including:
Accreditation--A standardized
program for evaluating health care organizations to ensure a specified level of quality, as defined by a set of industry standards. Organizations that meet accreditation criteria receive an official authorization of approval of their products and services.
Adverse selection--Plan enrollees
include a higher percentage of high risk enrollees than the percentage of high risk persons in the average population, resulting in the potential for greater utilization of health care services, and higher expenses, than estimated for an average population.
Admission certification--A form of
utilization review in which an assessment is made of the medical necessity of a patient's admission to a hospital or other inpatient institution. Admission certification seeks to assure that patients requiring a hospital level of care, and only such patients, are admitted to the hospital. Lengths of stay appropriate for the patient's admitting diagnosis are usually assigned and certified, and payment by any program requiring certification for the assigned stay is supposed to be assured. Certification can be done before admission (preadmission) or shortly after (concurrent).
Capitation--A method of payment
for health services in which a practitioner or hospital is pre-paid a fixed, per capita amount to
cover a specific period of time for each person served, regardless of the actual number or nature
of services provided to each person.
Case management--Management
directed toward serious conditions likely to require numerous providers and involve costly care.
Case managers handle each case individually, identifying the most cost-effective treatments for
extremely resource-intensive conditions, such as accidents, AIDS, cancer, major trauma,
prematurity, and strokes.
Certificate of Authority
(COA)--Authorization issued by a state government for licensing the
operation
of a health care agency within the state.
Coinsurance--A type of
cost-sharing in which the insured pays or shares part of the medical bill, usually according to a
fixed percentage. Generally included in fee-for-service/indemnity plans.
Community Rating--A system
of setting health insurance premiums by which the insurer calculates the total claims or health
expenditure experience of the members within a given geographic area or "community," and uses
that information to determine a rate that is common for all groups, regardless of the individual
claims experience of any one group (contrasts with Experience Rating).
Continuous Quality Improvement
(CQI)--A key component of a total quality management (TQM), CQI uses
rigorous, systematic, organization-wide processes to achieve ongoing improvement in the quality
of products, services and operations, and the elimination of waste. CQI programs focus on both
outcome and process of care.
Copayment--A type of
cost-sharing whereby insured or covered persons pay a specified flat amount per unit of service
or
unit of time, with the insurer paying the rest. The copayment is incurred at the time the service is
used. The amount paid does not vary with the cost of the service. Generally included in managed
care plans.
Credentialing--The process of
checking a practitioner's qualifications to grant practice privileges for a facility or a health plan.
The review may include references, training, experience, demonstrated ability, licensure
verification, and adequate malpractice insurance. Practitioners have raised concerns that
admission to managed care plans may also be based on economic
profiling, which reviews their expenditures and may be used to exclude
practitioners
who serve populations with conditions that require expensive care.
Deductible--A specific amount the
insured person must pay before the insurer's payments for covered health care services begin
under a medical insurance plan.
Diagnostic Related Group (DRG)--An
inpatient classification system used by the US Dept. of Health and Human Services/Health Care
Financing Administration (HCFA) to determine hospital reimbursement for Medicare patients.
The DRG system categorizes patients with similar medical diagnoses, treatment patterns, and
statistically comparable lengths of stay in a hospital, and attaches a reimbursement rate to each
DRG. Some managed care plans use the DRG payment method for setting payment rates and
selecting providers.
Enrollee-- Person eligible for health
plan services. Also referred to as member, subscriber, beneficiary;
Employee Retirement Income Security Act
(ERISA)--The federal Employee Retirement Income Security Act of 1974,
which reserves for the federal government the power to enact any laws or regulations that "relate
to" employer-sponsored benefit plans. These benefits have been broadly interpreted by the courts
to include pensions, health plans, and other benefits. The Act leaves to the states the right to
regulate commercial health insurance plans. Since states have been very active in this area, while
the federal government has not, many large employers have established "self-insured" health
plans
that are not subject to state regulations on health plan rates, benefits, and other protections.
Exclusive provider organization
(EPO)--An EPO is a more rigid type of PPO that requires the insured to use
only designated providers or sacrifice reimbursement altogether.
Experience-Rated
Premium--Health plan premium based on the anticipated claims experience of,
or utilization of services by, an enrolled group, based on attributes expected to affect its health
service utilization (such as age, previous claims history, etc.).
Fee-for-service--Traditional method of
paying for medical services whereby a practitioner bills for each encounter or service rendered.
Also known as indemnity insurance. This system contrasts with salary, per capita, or
pre-payment
systems, in which the payment is not changed with the number of services actually used.
Group model--A type of HMO
with medical centers where many different health services are provided in a central location.
Staff
of a group model HMO usually treat only HMO members.
Group practice--The application of
health care service by a number of practitioners working in systematic association with the joint
use of equipment and technical personnel and with centralized administration and financial
organization.
Health maintenance organization
(HMO)--A comprehensive health care financing and delivery organization that
provides or arranges for provision of covered health care services to a specified group of
enrollees, at a fixed periodic payment, through a panel of providers. Historically, four types of
HMO models have been common: 1) staff model in which physicians are salaried employees of
the
HMO; 2) group model, which contracts with multi-specialty physician group practices; 3) IPA
model, which contracts with Independent Practice Associations (IPA), which, in turn, contract
with independent physicians who practice in their own offices; 4) network model, which
contracts
with two or more independent group practices and/or IPAs. The HMO can be sponsored by the
government, medical schools, hospitals, employers, labor unions, consumer groups, insurance
companies, and hospital medical plans.
Indemnity--Benefits paid in a
predetermined amount in the event of a covered loss. Fee-for-service health insurance plans are
often also referred to as indemnity plans.
Indemnity benefits--Benefits
in
the form of cash payments rather than services. In most cases, after the provider of service has
billed the patient, the insured person is reimbursed by the company.
Individual practice association
(IPA)--A type of HMO in which a partnership, corporation, or association has
entered into an arrangement for provision of their service. Practitioners provide care in their own
offices and serve HMO members as part of their regular practice. IPAs are one source of
professional services for HMOs and are modeled after medical foundations.
Joint Commission on Accreditation of
Healthcare Organizations (JCAHO)--A private, non-profit organization which
functions as the main accrediting body for hospitals and other provider facilities, who pay
JCAHO for its services. JCAHO publishes national standards, surveys facilities on request, and
awards accreditation to those that demonstrate compliance with the standards. JCAHO
accreditation is voluntary, but is required for participation in Medicare. JCAHO now has
accreditation standards specific to health care networks and is now accrediting them.
Managed care--Health care
systems that integrate the financing and delivery of appropriate health care services to covered
individuals by arrangements with selected providers to furnish a comprehensive set of health care
services, explicit standards for selection of the care providers, formal programs for ongoing
quality assurance and utilization review, and significant financial incentives for members to use
providers and procedures associated with the plan.
Managed competition--A
theory of health care delivery in which a large numbers of consumers choose among health plans
that offer similar benefits. In theory, competition would be based on cost and quality.
Medicaid--State programs of public
assistance to eligible persons, regardless of age, whose income resources are insufficient to pay
for health care. Passed into law in 1965, Title XIX of the federal Social Security Act provides
matching federal funds for financing state Medicaid programs. The program covers a wide range
of services. Most of the recipients are low-income women and children, but 70% of the funds
pay
for nursing home and other long term care services for elderly and disabled people. Medicaid is
projected to serve about 36 million people at a cost of $158 billion in 1995.
Medicare--A federally administered
health insurance program for persons aged 65 and older and certain disabled people under 65
years old. Created in 1965 under Title XVIII of the Social Security Act, Medicare covers the cost
of hospitalization, medical care, and some related services for eligible persons without regard to
income. Medicare has two parts: Medicare Part A: Hospital Insurance (HI)
Program is compulsory and covers inpatient hospitalization costs (currently reimbursed using
DRGs under the prospective payment system) and limited post-hospital care. Medicare also pays
for pharmaceuticals provided in hospitals, but not for drugs provided in outpatient settings.
Medicare Part B: Supplementary Medical Insurance Program is voluntary and covers medically
necessary physicians' services, outpatient hospital services (currently reimbursed retrospectively)
and a number of other medical services and supplies not covered by Part A. Part B is available
for
a premium regardless of income. In 1994, Medicare served 35 million elderly and disabled
persons
at a cost of $200 billion.
Outpatient review--A review that
determines the appropriateness of treatment and monitors ongoing care, for purposes of
authorizing payment by a health plan.
Peer Review Organization (PRO)--A
federal program established by the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA),
which monitors the medical necessity and quality of services provided to Medicare and Medicaid
beneficiaries under the prospective payment reimbursement system. PROs also validate provider
coding assignments that affect Medicare reimbursement.
Physician-Hospital Organization
(PHO)--Organization of physicians and hospitals that, at a minimum, is
responsible for negotiating with third party payers.
Point-of-service (POS)--Often known as
open-ended HMOs or PPOs, these plans encourage use of network providers, but permit insured
individuals to choose providers outside the plan at the time service is rendered.
Preadmission certification--An
element of utilization review, which examines the need for proposed inpatient service(s) before
admission to an institution to determine the appropriateness of the setting, procedure, and length
of stay. Preadmission certification seeks to ensure that providers do not hospitalize people
unnecessarily or for longer than is medically necessary.
Preferred Provider Organization
(PPO)--An arrangement whereby a third-party payer contracts with a group of
"preferred" medical care providers who furnish services at lower than usual fees in return for
prompt payment and access to a certain volume of patients.
Premium--Rate that a plan
subscriber pays for coverage of specific health services.
Primary care--The point when the
patient first seeks assistance from the medical care system. It is also the care of the simpler and
more common illnesses. The primary care provider assumes ongoing responsibility for the
patient
in both health maintenance and treatment.
Prior authorization--Requirement of a
third party, under some systems of utilization review, that a provider justify the need for
delivering a particular service to a patient before providing service in order to receive
reimbursement.
Quality management--The process by
which an organization measures the extent to which the providers conform to defined standards
and, based on that data, improve care and outcomes.
Reinsurance--Insurance by the
insurer with a third party against risks that the plan cannot easily manage or predict (for example,
catastrophic care).
Risk--Possibility that revenues of the
insurer will not be sufficient to cover expenditures incurred in the delivery of contractual
services.
Risk management--A comprehensive
program of activities to identify, evaluate, and take corrective action against risks that may lead
to
patient or employee injury, and property loss or damage with resulting financial loss or legal
liability.
Risk retention--Financial liability
remaining with a major entity to the insurance program, such as a group of providers.
Self-insured--Health coverage in
which
health services are delivered by providers but the member's employer, not the insurance plan,
bears the risk for any expenses incurred. These plans usually contract with a third party
administrator, or an insurance company through an Administrative Services Only (ASO)
arrangement, to administer the plan, including paying claims, determining eligibility, etc.
Staff model--A type of HMO,
similar to the group model, in which physicians are salaried employees who provide their
services
exclusively to HMO enrollees.
Third-party administrator--A
person or organization that provides certain administrative services to group benefit plans,
including premium accounting, claims review and payment, claims utilization review,
maintenance
of employee eligibility records, and negotiations with insurers that provide stop-loss protection
for
large claims. These entities often serve employer health plans that are "self-insured" under
ERISA,
substituting for many of the functions of state-regulated commercial insurance companies.
Third party payment--Payment
for health care by a party other than the enrollee (for example, by an insurance company).
24-hour coverage--Insurance
coverage that removes the boundary, or part of the boundary, between occupational and
nonoccupational claims. The most comprehensive definition describes a complete system of
medical and disability benefits available to individuals regardless of employment or financial
status
or whether the cause is work-related. The simplest definition describes a system that ensures that
an employee's claim is covered under the correct insurance policy (that is, workers'
compensation,
group health, or disability), and that there is no double recovery. There are many variants
between
these two extremes.
Utilization review--A
mechanism used by some insurers and employers to evaluate health care on the basis of
appropriateness, necessity, and quality. For hospital review, it can include preadmission
certification, concurrent review with discharge planning, and retrospective review.
Article published January 6, 1997 |
© 1999 American Nurses Association