Understanding Self Directed Health Plans Understanding Self Directed Health Plans
To understand how this works, it is best to divide the health care budget into three separate categories:
1. Routine Services. Basically routine services are such things as office visits, routine lab work such as blood tests and basic x-rays, and other normal services, such as routine checkups for babies. Gatekeeper strategies and capitation are known to cost as much in premium dollars to administer as they can save a subscriber in health care costs under an HMO or PPO health care plan. Because these strategies can be eliminated under a SDHP, the savings are passed on to the consumer.
2. Acute and Chronic Care. This is where managed care works the hardest. According to a recent report by the Partnership for Solutions, a research group at Johns Hopkins University, people with chronic conditions account for 88 percent of all prescriptions filled, 72 percent of all physician visits, and 76 percent of all care needed on an inpatient basis. Managed Care magazine adds that more than half of health care dollars are spent on people requiring acute or chronic care. Studies by Kaiser's Care Management Institute (CMI) reveals that only 22 percent of the population surveyed have zero chronic care needs. The remaining had from one to five chronic care situations. If one of these consumers is in a group plan, then these added costs for acute and chronic conditions are passed on to the remaining population through raises in health care premiums, even if they are in the percentile that normally only spends about $500 annually on health care issues.
Studies of health service utilization also show a wide gap in cost of service for chronically ill patients with almost identical symptoms. Certain geographical locations can sometimes be three to four times as expensive as other regions of the country. The managed care company is constantly attempting to reduce these variations, thus adding to health care costs.
SDHP's, on the other hand, manage chronic conditions by offering an allowance of treatment for what they term as "episodes of care" that is based on the average cost of the procedure in the particular region. For example, a woman wishing to have a radical mastectomy for her breast cancer would be given an allowance equal to the average cost of the procedure in her geographical region. Any additional expense to her would be out of pocket. This gives the consumer incentive to keep health care costs down, and make wise decisions on health care.
3. Catastrophic Care Services. This would include such things as heart and organ transplants, newborn children, and traumas. SDHP plans feel that this treatment should be handled by what they term "centers of excellence," and contract with these centers to make these high cost services available. Again, if subscribers feel that they need to opt out of these programs and seek services elsewhere, then they would be limited to an episode of care allowance. An example of this would be a heart transplant, which might have an episode of care allowance of $150,000. The incentive to the person with a SDHP would be to stay with the center of excellence dictated by the SDHP, and therefore not be subjected to a limit of care or accrue out of pocket expenses.
With the advent of the Internet, people are now becoming more aware of health care trends. As more information becomes available, people can research online the best health care plan to suit their individual needs. Many people in the United States are becoming increasingly unhappy with the cost of the managed care concept, and are willing to seek an alternative to this. With the increased capability to finance services utilizing the episode of care allowances, many people are finding real relief from the whole managed care scenario. Although a self directed health care plan may not be for everyone, it is certainly becoming a viable alternative.