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April 4, 2019

The March to Managed

For many physicians, the phrase ‘managed care’ should never travel without the appropriate preceding epithet. That is fitting given the role that a dam, specifically the Grand Coulee Dam, played in the early history of managed care and HMOs.  It is fun to cuss a little and get away with it because you have woven in a historical double entendre.

While there were some early HMO-like experiments in the early 1930s, the first discernible representation of what we know today as managed care arrived in 1938 when industrialist Henry J. Kaiser partnered with Dr. Sidney Garfield to provide prepaid healthcare for the workers building the dam on the Columbia River in the state of Washington.

Early on, Kaiser and the eponymous Kaiser Permanente Medical Group were synonymous with this new idea. President Nixon signed the HMO Act of 1973 and most of us can pretty much sketch out the history since then… it was just California thing, then it was going to take over the country, then it got beat back, and now, maybe it will and maybe it won’t, depending on where you live and how you practice.

However, there is one segment where managed-care (and if you think PPOs are ‘managed-care’ then you also think a Twitter feed constitutes literature…we are talking about the HMO idea) is on the steady march forward.  In case you’ve not been paying attention, the government payers – both Medicare and Medicaid – are becoming more managed every year.

Here are some numbers for you.

First, let’s take Medicaid. Prior to the Affordable Care Act, there were 56 million people covered by Medicaid. That number is now up to 72 million. Of those, 49 million (68%) are in a managed Medicaid plan.

Of Medicare’s 60 million beneficiaries, 20 million are now covered by Medicare Advantage, also a managed plan.  UnitedHealthcare, the largest player in the MA space, sees a clear path in the coming years for MA penetration to reach 50% of the Medicare population.

Just a little math shows that one in five Americans are now covered by a government-sponsored HMO, That slice of the pie is going to continue to grow, and we haven’t even thrown in commercial HMOs yet.

There are a couple of takeaways from these headline numbers.

When CMS threw out their lofty goals for the transition to value based care, there was a lot of smoke and mirrors regarding the Obama care acronyms like ‘ACOs.’  Don’t get confused by the sideshow…the objective is being accomplished by moving government beneficiaries into managed-care plans.

Second, these are what you think they are – ‘managed’ plans with gatekeepers on the front end, narrow networks on the back end, and rigorous utilization management throughout the process.

Plan your strategy accordingly.

And if you get in trouble for using profanity, tell them you were just thinking about hydroelectric power system.

Tim Coan
Tim Coan

CEO and founder

Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.