An introduction to care management interventions and their implications for actuaries.

INTRODUCTION

 

Early insurance approaches to the financing of health care focused on hospital reimbursement and were characterized by two key assumptions. The first assumption was that providers would exercise reasonable professional judgment in the provision of services to patients. The second assumption was that patients would tend to be conservative regarding their use of services (since these services often involved both discomfort and uncertain outcomes).

 

In this model, the insurance company’s role was limited to “traditional” insurance functions, such as underwriting and pricing, verification of insurance eligibility and claim payment. Cost was restrained through these means as well as through traditional insurance product features such as deductibles and coinsurance. Intervention by the insurer – either with the patient or the provider – was unthinkable in this era.

 

Over time, the traditional insurance model failed to contain costs and was replaced by a more interventionist model in which the entity financing the services began to try to influence the demand for and access to medical resources and services. The “insurance” model gave way to the “managed care” model.