Managed Care Compliance

  • Date: February 18, 2011
  • Source: Admin
Webinar All Access Pass Subscription

The term managed care describes a variety of techniques intended to reduce the cost of providing health benefits and improve the quality of care for organizations that use those techniques or provide them as services to other organizations, or to describe systems of financing and delivering health care to enrollees organized around managed care techniques and concepts.

States have regulated managed care organizations to ensure their financial solvency, including their ability to cover the risk of enrollees. Nearly all have passed "patient protection" or consumer-oriented laws and/or regulations.

Related regulations/laws

Health Maintenance Organization Act of 1973

·       Also known as the HMO Act of 1973, 42 U.S.C. § 300e

·       Provides grants and loans for HMO

·      Removes certain state restrictions for federally qualified


·         Requires employers with 25 or more employees to offer federally certified HMO options if they offered traditional health insurance to employees

Health Insurance Portability and Accountability Act (HIPAA)

·         Title I protects health insurance coverage for workers and their families when they change or lose their jobs.

·         Title II requires the establishment of national standards for electronic health care transactions and national identifiers for providers, health insurance plans, and employers.

HIPAA Privacy Rule

·         Regulates the use and disclosure of certain information held by "covered entities" (generally, health care clearinghouses, employer sponsored health plans, health insurers, and medical service providers that engage in certain transactions.)


HIPAA Security Rule

·         Protects the confidentiality, integrity and availability of electronic protected health information

Employee Retirement Income Security Act of 1974


·         Preempts all state laws that “relate to” employee benefits plans, allowing states to continue to regulate insurance products but not employee benefits, including health insurance, provided by firms that self-insure


Managed Care Plans

Health Maintenance Organizations (HMO)


·         Provide healthcare coverage through hospitals, doctors, and other providers with which the HMO has a contract

·         Provide quality healthcare services at a lower cost.

·         Benefit is the reduction of healthcare costs for the plan members

Preferred Provider Organizations (PPO)


·         Organization of medical doctors, hospitals, and other healthcare providers who have covenanted with an insurer or a third-party administrator to provide health care at reduced rates to the insurer's or administrator's clients.

·         Combines features of traditional Indemnity Health Insurance plan (Fee-for-Service) with Managed Care

Point-of-Service (POS) plans

·         Based on the basic managed care foundation

·         Lower medical costs in exchange for more limited choice

·         Combines characteristics of both the HMO and the PPO

·         More flexibility than in the HMO plans and less than in a PPO

Independent Practice Association (IPA)

Type of HMO that contracts with a group of physicians to provide service to the HMO's members

Contract is not usually exclusive, allowing individual doctors or the group to sign contracts with multiple HMOs.

Participating physicians usually also serve fee-for-service patients not associated with managed care.


Fundamentals to Effective Compliance

  • Implement written P&Ps and standards of conduct;
  • Designate compliance officer and committee;
  • Conduct effective training and education;
  • Develop effective lines of communication;
  • Enforce standards through well-publicized disciplinary guidelines and develop P&Ps that address dealings with sanctioned individuals;
  • Conducting internal monitoring and auditing;
  • Respond promptly to detected offenses, developing corrective action, and reporting to the Government.

Consequences of noncompliance

HIPAA calls for severe civil and criminal penalties for noncompliance, including:

  • Fines up to $25,000 for multiple violations of the same standard in a calendar year
  • Fines up to $250,000 and/or imprisonment up to 10 years for known misuse of individually identifiable health information


Other noncompliance penalties

  • Sanctions / fines / damages
  • Marketing and enrollment freezes/suspension
  • Denial of Service Area Expansion
  • Contract termination
  • Revoke or Suspend Licensure / Accreditations
  • Erosion of shareholder confidence and enterprise value



Best Sellers
You Recently Viewed