Managed Care: Is There A Fit For The Fire Service?

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Managed care, gatekeeping, pathway management, capitation - do any of these terms have anything to do with the fire service? The answer is unquestionably yes! Whether you agree or disagree with the care provided under the managed care environment, it is not going away.

In 1992, President Clinton appointed the first lady to head a health-care-reform task force that had the goal of creating a national health-care policy under which everyone would receive universal health care regardless of income. That is now dead and what has emerged with a roaring thunderclap is managed care.

Today's statistics estimate that 14,000 people a day are being moved from traditional medical insurance plans into managed-care plans. Health theorists indicate that by the year 2005, over 90% of the population will be enrolled in a managed-care plan.

What is managed care all about? Managed care is about managing finance. In the past, our medical industry was a consumption system. Every medical procedure done was added to a list of charges. Every IV and medication administered, Band-Aid applied and every day spent in a hospital bed was charged to a patient's bill on a fee-for-service basis. That bill was then submitted to the patient's medical insurance company. Each year, health-care costs escalated and employees found their health-care premiums on their paychecks also continuing to rise. In essence this was a retrospective pay system. The bill was paid after the services were received. This system also eroded into the profits of the large medical-insurance providers and employers.

Under a managed-care system, the payment is prospective or capitated - a medical insurance provider will contract with a medical provider to take care of their members' medical needs. The medical provider is paid whether the member seeks medical services or not. The contracted amount of money is usually in the form of "per member, per month."

Basically, XYZ medical insurance company will give a set amount of money per month for each member in its health care to ABC Hospital to take care of in-hospital medical services. ABC Hospital now has all its profit up-front, unlike the past system, in which the profit was made when a bill was sent after the patient was discharged from the hospital. It is now up to the hospital to be fiscally responsible or frugal providing your medical services.

In managed care or, if you prefer, managing the finances, the goal is to fit the patient's medical needs with the proper medical resource. Perform a self-assessment on your fire department if you do transports - how many patients out of every 10 transports actually needed to go to an emergency room? Maybe two or three! Don't you think the number crunchers at the medical insurance companies and managed-care organizations know this?

Many managed-care programs require members to call for permission prior to receiving treatment. In essence, these types of programs "manage the access" to the medical system, whereas most 911 systems "manage the demand." When a 911 system manages the demand, everyone who calls 911 for medical assistance gets virtually the same response - at the minimum, an ambulance.

When managed-care programs manage access to the system, they play a gatekeeper role. In this "pathway- management" process, the managed-care program will attempt to fit a caller's medical needs with the proper medical resource. That medical resource may well consist of giving online instructions and making a doctor's appointment the next day. These patients may have previously called 911 for medical assistance. If only two or three out of every 10 patients need to go to an emergency room in an ambulance, what happens if managed-care organizations succeed in keeping the other 70%-80% of patients who call 911 from doing so? How would this impact fire departments when the majority of their calls are EMS runs? He who controls the patient flow controls the money.

What is wrong with this system? First, citizens must decide whether to call 911 or the managed-care organization. Second, the person who decides to call the managed-care organization first may be denied needed rapid medical intervention from the local fire department. Compounding this have been repeated failures to pass legislation in Congress defining an "emergency." Several bills at state and federal levels have defined an emergency as how a "prudent layperson" would define it. Those bills also contained language indicating managed-care organizations would have to pay for medical services provided the cases were emergencies. As of this writing, many of these bills have not been passed into law due to the strong insurance lobby.

Many fire agencies have been slow to embrace working with managed care organizations. Major private-ambulance companies have eagerly stepped up to work with managed-care organizations to control finances through alternative-delivery care models and "gatekeeper" communication centers.

Bottom line - a fire agency must identify the needs of the managed-care organizations in its area, then begin a working/business relationship with them. The EMS industry is estimated to be worth $10 billion a year and is a subset of the entire medical industry, valued at $1 trillion a year. With these types of dollars on the table, it's easy to see why the fire service must participate in this ongoing transition of our medical industry.


Gary Ludwig is the chief paramedic for the St. Louis Fire Department and is currently serving his fourth term as an elected member of the EMS executive board for the International Association of Fire Chiefs. He was awarded Missouri's EMS Administrator of the Year for 1998.

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