Managed Care Organisations

• 25 Jun 2024

For Prelims: Ayushman Bharat Mission, National Health Policy 2017, Managed Care Organization (MCO), International Labour Organization (ILO)

For Mains: Challenges to MCOs in India, Steps to develop MCOs in India, Universal Health Coverage (UHC)

Source: TH

Why in News?

Recently, a prominent healthcare chain in South India announced its venture into comprehensive health insurance, integrating insurance and healthcare provision functions under one roof, mirroring a managed care organisation (MCO).

• In a related development, an International Labour Organization (ILO) paper has also revealed that achieving universal social protection for low- and middle-income countries would necessitate an additional USD 1.4 trillion per year.

Note:

• MCOs in US: MCOs in the U.S. have predominantly served urban, high-income populations.
  • Successful MCOs require significant financial clout, managerial expertise, and a well-defined beneficiary base.

What is the Background of Managed Care Organizations(MCOs)?

• About:
  • An MCO is a healthcare provider whose goal is to provide appropriate, cost-effective medical treatment.
  • MCOs in the US evolved from early 20th-century prepaid healthcare practices.
  • Mainstreaming in the 1970s: The combination of insurance and service functions arose to manage costs, focusing on prevention, early management, and cost control with fixed premiums.
  • Evolution: MCOs have diversified and penetrated deeply into the health insurance space, although robust evidence of their impact on health outcomes and preventive care is limited. They have, however, helped reduce costly hospitalisations and associated expenses.
• Development in India: Since the 1980s, India's health insurance has focused on indemnity insurance and covering hospitalisation costs, despite a large market for outpatient consultations.

Bridging the Financing Gap for Universal Health Coverage

• Global and Regional Financing Needs:
  • Financing Gap: Achieving universal social protection in low- and middle-income countries requires an additional USD 1.4 trillion annually, with essential health care comprising 60.1% of this need.
  • Regional Disparities: Africa faces the largest financing gap, followed by the Arab States, Latin America, and Asia.
• Strategies to Expand Fiscal Space:
  • Domestic Resource Mobilisation: Progressive taxation, social security contributions, and formalising employment and enterprises are crucial.
  • Fuel Subsidies: Removing explicit and implicit fuel subsidies could generate significant fiscal space.
  • Debt Management: Renegotiating government debt at lower interest rates could free resources for social protection.
  • Official Development Assistance (ODA): Increasing ODA is vital, especially for low-income countries where the financing gap is substantial.

What are the Challenges to MCO in India?

• Limited Reach: MCOs in India primarily target the affluent, urban population as health insurance market is skewed towards urban areas. This neglects the vast rural demographics and hinders efforts towards Universal Health Coverage (UHC).
• Informal Outpatient Care: A significant portion of healthcare in India occurs in informal outpatient settings. This lack of standardisation and regulation makes it difficult for MCOs to integrate and manage care effectively.
• Absent Standard Protocols: The widespread absence of widely accepted clinical protocols across healthcare providers creates inconsistency and reduces the quality control MCOs rely on.
• Economic Unsustainability: High operational costs and resulting unaffordable premiums for MCO plans create a financial hurdle. This discourages participation and hinders long-term viability.
• Lack of Incentives for Cost Control: The current health insurance model in India hasn't fostered a culture of consumer-driven cost control, a core principle of MCOs.

What are the Steps Needed to Develop MCOs in India?

• Focus on Rural Outreach: Partner with government initiatives like Ayushman Bharat to expand coverage and leverage existing rural healthcare infrastructure. This aligns with the National Health Policy 2017's push for UHC.
• Standardisation and Regulation: Advocate for the development and implementation of standardised clinical protocols across outpatient settings. Collaborate with the National Health Authority (NHA) for accreditation and quality control mechanisms.
• Technology and Innovation: Utilise technology to streamline processes, reduce administrative costs, and offer telemedicine services to bridge the rural-urban gap. This aligns with recommendations from the Committee on Affordable Healthcare for All.
• Value-Based Pricing: Implement value-based pricing models that reward quality care and efficient service delivery. This incentivises cost control and aligns with suggestions from NITI Aayog.
• Public-Private Partnerships: Foster public-private partnerships (PPPs) to leverage government resources and private sector expertise for broader reach and improved infrastructure.
• Data-Driven Decision-Making: Encourage data collection and analysis to track healthcare trends, identify cost-effective treatment options, and improve service delivery across MCO networks. This aligns with the vision of the National Digital Health Mission (NDHM).

Role of Public Policy in MCO Implementation

• NITI Aayog Report:
  • In 2021, NITI Aayog recommended an outpatient care insurance scheme based on a subscription model to generate savings through better care integration.
  • Managed care systems could streamline management protocols, consolidate dispersed practices, and emphasise preventive care, providing a sustainable solution to outpatient care coverage.
• Ayushman Bharat Mission:
  • The mission announced incentives for opening hospitals in underserved areas, prioritizing PMJAY beneficiaries.
  • Similar incentives could be designed for MCOs to serve PMJAY patients and private clients, expanding awareness and demand for MCOs over time.

Conclusion

Universal health coverage is a complex challenge that requires multifaceted solutions. Managed Care Organizations (MCOs) can significantly contribute to India's healthcare landscape. By fostering public support and gradually implementing MCOs, along with adopting comprehensive financial strategies, India can make substantial progress toward achieving universal health care.

Drishti Mains Question:

Q. Discuss how Managed Care Organizations (MCOs) can play a pivotal role in strengthening the health system in India.

UPSC Civil Services Examination, Previous Year Question (PYQ)

Prelims:

Q. Consider the following: (2011)

1. Right to education

2. Right to equal access to public service

3. Right to food.

Which of the above is/are Human Right/Human Rights under the “Universal Declaration of Human Rights”?

(a) 1 only

(b) 1 and 2 only

(c) 3 only

(d) 1, 2 and 3

Ans: (d)

Q. ‘SWAYAM’ an initiative of the Government of India, aims at (2016)

(a) promoting the Self Help Groups in rural areas

(b) providing financial and technical assistance to young start-up entrepreneurs

(c) promoting the education and health of adolescent girls

(d) providing affordable and quality education to the citizens for free

Ans: (d)

---

Mains:

Q. Appropriate local community-level healthcare intervention is a prerequisite to achieve ‘Health for All’ in India. Explain. (2018)