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The Role of HEALTH MAINTENANCE ORGANIZATIONS in the Nigerian National Health Insurance Scheme. By M.A. Arogundade. OUTLINE. Introduction to Managed Care Types of Managed Care Brief History of HMO Characteristics of a HMO HMO in Nigeria -Entry-Registration
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‘Managed care’ conjures different interpretations among different people. This lack of clarity is particularly acute in developing countries, where many think of managed care as a panacea for all their health sector problems—including issues of access, costs or financing.
The term "managed care" is used to describe a variety of techniques intended to reduce the cost of providing health benefits and improve the quality of care ("managed care techniques"), organizations that use those techniques or provide them as services to other organizations ("managed care organizations"), or systems of financing and delivering health care to enrollees organized around managed care techniques and concepts ("managed care delivery systems").
Managed Care is the enrolment of patients into a plan that makes capitated payments to health care providers on behalf of its members, thus shifting the financial risk for health care from patients and payers to providers. The intent of this shift is to provide incentives to health care professionals to reduce their utilization of resources, ideally through measures such as health promotion and disease prevention among the group's members.
…Encyclopedia of Public Health
During the early 1970s, the earliest managed care models were being developed and the concept of a ‘Health Maintenance Organization’ (or HMO) was put forth by Dr Paul Ellwood. President Nixon signed the HMO Act in 1973, aiming to enroll 50% of all Americans in HMOs by the end of the decade. Enrolment in HMOs remained low till the early 1980s, when the first strains began to appear in the fee-for-service system. Premium increases reached a stage where they began to erode company profits. The debate over rising premium costs was structured in terms of the diminishing competitiveness of American companies, especially on their ability to grow and innovate. While large employers could bear the cost increases, many small employers simply made a business decision to stop paying for health insurance for their employees, leaving many employees uninsured.
By the early 1980s, healthcare costs reached a point where a majority of the payers, including both employers and the federal government, felt they had to take action. In August 1983, the federal government changed the way it paid hospitals and physicians to a prepaid system based on diagnosis. It was during this ferment of experimentation that the concept of managed care began its decade-long boom.
Instead of having an open chequebook, employers decided that they would henceforth pay a fixed amount per employee or, in other words, capitate their healthcare expenditures to a set, pre-determined amount. Employers began to offer managed care plans as well as indemnity health insurance, and capped the amount they would pay for premiums. Employees who wanted traditional indemnity insurance had to pay more for premiums.
Health Maintenance Organization as a terminology was coined by Dr. Paul Elwood (USA) in the early 1970’s as an advancement in the development of Private Provider Group Practice then prevalent in California, USA.
HMOs have exclusive provider networks. They may also use primary care providers (PCP) as gatekeepers. Gatekeepers are responsible for arranging a patient’s referral to a specialist or admission to a hospital.
While most HMOs use gatekeepers, some HMOs have open access plans. These plans allow the patient to choose any PCP or specialist in the network without a referral.
Many HMOs also use reimbursement systems to encourage providers to be more cost conscious. HMOs may contract directly with physicians in the community, or may contract with networks of physicians. This arrangement is called a network or IPA model HMO
HMOs may have their own physicians on salary or in an exclusive contractual arrangement. This is called a group- or staff-model HMO.
HMOs sometimes give physicians or other health care providers’ financial incentives to be more efficient managers of care.
While these payment mechanisms provide an incentive to reduce unnecessary care, some people worry that these payment mechanisms also may provide incentives to withhold necessary care. In contrast, some people were concerned that traditional fee-for-service gave physicians incentives to providing unnecessary care
The National Health insurance Scheme in Nigeria is designed to be driven through the operation of Health Maintenance Organizations (HMOs). These may be Private or Public Companies; for-profit and not-for-profit registered entities with the aim of ensuring the provision of qualitative and cost effective health care services to contributors under the Scheme.
The Council shall approve and register for the Scheme private and public Health Maintenance Organizations
Act 35 of 1999Section 19 (1)
The registration of an organization under the scheme shall be in such form and manner as may be determined from time to time, by the Council, using guidelines, which shall include provisions requiring the organization to:-
(a) Be financially viable before and after registration;
(b) Make complete disclosure of the ownership structure and composition of the organization;
(c) Have an account with one or more banks approved by the council
(d) Be insured with an insurance company acceptable to the Council; and
(e) Give an undertaking that the organization shall manage and invest the funds accruing to it from contributions received in pursuant to this decree in accordance with guidelines to be issued, from time to time, by the Council
i. The Board of Directors of the HMOs to ascertain whether or not they are fit and proper persons to run or manage HMOs
ii. The policy documents and manuals of the HMOs.
iii The organizational structure of the HMO with a view to ascertaining how the structure could enhance the efficiency and ability of the HMO.
iv The management team of the HMO.
v The provider network of the HMO including development and management networks.
vi Health management procedures
viii Information management process that shall include computer based technology
ix Evidence of registration with Corporate Affairs commission and minimum paid-up capital
x Certificate of mandatory deposit of 25% of paid-up capital with Central Bank of Nigeria.
xi Evidence of tax payment and returns, and adherence to legal obligations under the NHIS
xii Minutes books with a view to ascertaining attendance of Directors and adherence to these rules and regulations by the Board of Directors and Management team.
Any HMO registered under the Scheme shall:
Establish a bank account in a bank appointed by NHIS into which shall be paid every contribution by or on behalf of a contributor.
HMO shall carry on any business other than the business of health care management as provided by the Decree.
The funds management of the HMO should be in accordance with specific guidelines that prevent fraud on solvency problems.
HMOs shall be prohibited from directly engaging in any business that is not related to health.
HMO's may not be directly affiliated to banks
HMOs shall observe prescribed standards of reporting fund holdings for verification purposes.
The HMOs shall develop Operational Manuals in line with the Operational guidelines made by the Scheme.
e)The HMOs shall engage in contributor education services, provider education services, and all such services shall be documented and made available to contributors and the interested public.
f) HMOs shall have primary and specialist contracted providers in the geographical areas covered by their operation.
g) The HMO shall show evidence of minimum information and data collection and storage facilities. Standardised reporting would be required by the NHIS and this shall determine the minimum information systems capability of the HMO.
Role of HMO in Operation of Health Care delivery System:
The HMOs shall develop a health care organizational structure that will ensure that:
Role of HMO in Drug Benefits Administration
a) Every contract between an HMO and a provider shall include the following
Agreement to accept contributors applying to them up to the maximum number without discrimination. A provider cannot reject a patient except on appeal stating the exceptional circumstances. If the Scheme is satisfied with these reasons it would have power to require another provider to accept that patient.
b) The HMO shall provide every registered Primary Provider with a list of approved or registered:
i Blood banks
iv X-ray and Medical laboratories
v Specialists in areas of medicine and medical care
c) Providers shall be inspected periodically. HMO representatives shall be allowed reasonable and meaningful access to the provider's premises, all records relevant to the operations of the scheme.
Allowing HMO's to haphazardly enter and leave the market contributes in no small way to market instability and erodes consumer confidence. For this reason the HMOs shall be required to observe the following: