MANAGED CARE PROVISIONS IN TRADITIONAL PLANS

Historically, traditional medical expense plans contained few provision aimed at managing the care of covered persons, but this situation continues to evolve. A few managed care provisions such as hospital precertification and second opinions, have been around for many years. It has also been common for some time to see benefits provided for treatment in facilities other than hospitals. These types of facilities and the benefits for them are discussed below.

Other managed care provisions and practices that may be found in traditional plans include the following:

Preapproval of visits to specialists.

Increased benefits for preventive care.

Carve-outs of benefits that can be provided cost effectively under arrangements that employ various degrees of managed care. Examples include prescription drugs, mental illness, substance abuse, and maternity management.

Some traditional major medical plans actually make wide use of managed care techniques; the primary factor that prevents them from being called managed care plans is that there are few restrictions on access to providers.

Alternative Facilities for Treatment

Many traditional medical expense plans provide coverage for treatment in facilities that are alternatives to hospitals. Initially, this coverage was provided primarily to the extent that it reduced hospital benefits that were otherwise covered. While this is still the primary effect of this coverage, it is often an integral part of medical expense plans, and benefits are provided even if they might not have been covered under a plan limited solely to treatment received in hospitals. The following types of coverage are discussed:

Extended-care-facility benefits

Home health care benefits

Hospice benefits

Birthing centers

Extended-Care-Facility Benefits
Many hospital patients recover to a point where they no longer require the full level of medical care provided by a hospital, but they cannot be discharged because they still require a period of convalescence under supervised medical care. Extended-care facilities (often called convalescent nursing homes or skilled-nursing facilities) have been established in many areas to provide this type of care. To the extent that patients can be treated in these facilities (which are often adjacent to hospitals), daily room-and-board charges can be reduced—often substantially.

Extended-care-facility coverage provides benefits to the person who is an inpatient in an extended-care facility, which is typically defined as an institution that furnishes room and board and 24-hour-a-day skilled-nursing care under the supervision of a physician or a registered professional nurse. It does not include facilities that are designed as a place for rest or domiciliary care for the aged. In addition, facilities for the treatment of drug abuse and alcoholism are often excluded from the definition.

To receive benefits, the following conditions must usually be satisfied:

The confinement must be recommended by a physician.

Twenty-four-hour-a-day nursing care must be needed.

The confinement must commence within (1) 14 days after termination of a specified period of hospital confinement (generally three days) for which room-and-board benefits were payable or (2) 14 days of a previous confinement in an extended-care facility for which benefits were payable. A few but an increasing number of contracts include benefits for situations where extended-care facilities are used in lieu of hospitalization.

The confinement must be for the same or a related condition for which the covered person was hospitalized.

Benefits are provided in much the same manner as under hospital expense coverage. If hospital expense benefits are paid on a semiprivate accommodation basis, extended-care-facility benefits are generally paid on the same basis. If hospital expense benefits are subject to a daily dollar maximum, extended-care-facility benefits are usually likewise subject to a daily dollar maximum, most typically equal to 50 percent of the daily hospital benefit. The maximum length of time for which extended-care-facility benefits are paid may be independent of the period of time for which a person is hospitalized, in which case a maximum of 60 days' coverage is fairly common. Alternatively, the benefit period may be related to the number of unused hospital days. The most common approach in this instance is to allow two days in an extended-care facility for each unused hospital day. For example, if a hospital expense plan provides benefits for a maximum period of 90 days and if a covered person is hospitalized for 50 days, the 40 unused hospital days can be exchanged for 80 days of benefits in an extended-care facility. Other charges incurred in an extended-care facility may be treated in one of several ways. They may be covered in full, subject to a separate dollar limit, or treated as part of the maximum benefit payable for other charges under hospital expense coverage.

Home Health Care Benefits
Home health care coverage is similar to extended-care-facility benefits but designed for those situations when the necessary part-time nursing care ordered by a physician following hospitalization can be provided in the patient's home. Coverage is for (1) nursing care (usually limited to a maximum of two hours per day) under the supervision of a registered nurse; (2) physical, occupational and speech therapy; and (3) medical supplies and equipment, such as wheelchairs and hospital beds.

In most cases, the benefits payable are equal to a percentage, frequently 80 percent, of reasonable-and-customary charges. Benefit payments are limited to either a maximum number of visits (such as 60 per calendar year) or to a period of time (such as 90 days after benefits commence). In the latter case, the time period may be a function of the unused hospital days, such as three days of home visits for each unused hospital day.

Hospice Benefits
Hospices for the treatment of terminally ill persons are a recent development in the area of medical care. Hospice care does not attempt to cure medical conditions but rather is devoted to easing the physical and psychological pain associated with death. In addition to providing services for the dying patient, a hospice may also offer counseling to family members. While a hospice is usually thought of as a separate facility, this type of care can also be provided on an outpatient basis in the dying person's home. Where hospice care is available, the cost of treating terminally ill patients is usually much less than the cost of traditional hospitalization. Hospice benefits may be subject to a specified maximum benefit, such as $5,000.

Birthing Centers
Another recent development in medical care is birthing centers, separate from hospitals. The cost of using birthing centers is considerably less than using hospitals. Deliveries are performed by nurse-midwives, and mothers and babies are released shortly after birth. Benefits may be paid as if the mother had used a hospital and obstetrician but are frequently paid in full as an incentive to use these lower-cost facilities.