Robinson believes that portions of the United States are on the verge of a fourth stage of evolution in the development of managing health insurance and insurance. Phase one included reducing costs by developing purchasing power. With a critical mass of enrollees and control of the patient, managed care companies exacted volume discounts. In the early years of managed care, negotiating discounts with physicians, hospitals, and other providers was a key driver in reducing insurance costs. Volume discounts became a less significant driver in controlling costs, and controlling utilization came to the fore.
Physician to act as a gatekeeper
Phase Two involved the reduction of costs by curtailing inappropriate utilization of specialists and other high-cost providers. In this phase, managed care organizations allowed services by specialists and other providers only if a primary care physician referred the care given. Managed care companies depended on the primary care physician to act as a gatekeeper, assuring only appropriate utilization to flow through the system. Volume discounts and the gatekeeper concept allowed HMOs to price products lower to attract enrollees. However, the restrictive features that drove costs down also limited enrollment growth potential; a large portion of the population demanded freedom of choice and free access to the system.
Phase Three is the driving of enrollment by adding an indemnity feature. Although managed care had developed an effective supply-side of the insurance equation, the demand side was seeding unrestricted access to providers. To meet demand, managed care companies developed the point-of-service plan, which is a hybrid of HMO and indemnity coverage. In a POS plan, members choose a PCP (primary care physician) and if they use the HMO system, out-of-pocket expenses are limited to a $5-$10 physician fee and $5-$10 charge per prescription. In the HMO system, enrollees do not have to file forms and there are no co-payments.
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