Managed Care: Rate Setting - Essay Example

In relation to the operations perform by Medicaid agencies, HMOs/PHPs avail a rate of capitation, which briefly revolves around a percentage of 90-95 of the amount that the states would have to compensate, in case the operation was conducted based on the traditional fee-for-service system. Notably, there existed a series of controversies related to the system of deciding fees for availing services associated with managed care. More importantly, Medicaid rate-setting agencies do not face problems with fixing the base rate of the previous year. However, the major problems are mainly faced with determining the probable future expenditures of any program, which is likely to incur from its future operations. Thus, this dilemma in expenditure planning further affects the rate settings of managed care mechanisms based on the probabilistic premium rate. With effective control of administrative costs and other related expenses, the Medicaid agencies faced severe forms of difficulties related to accruing payments and other relevant needs (Anderson & Fox, 1987).

Furthermore, the biased or improper selection of payment services was noted to be affecting the overall process of rate settings. Notably, this sort of plan is likely to attract different sets of people undergoing distinct health conditions. Thus, to increase the transparency of the rate-setting system, the Medicaid agencies should develop a plan for incorporating healthier enrollees for Medicaid programs. With the view of developing a biased plan, Medicaid organizations should remain indulged in formulating effective individual programs within the domain of caregiving. Thus, it could be stated that rate setting for a program is one of the major issues faced by Medicaid organizations in enhancing the ability of the programs to meet the diverse needs of the enrollees (Anderson & Fox, 1987