Final answer:
Managed care controls healthcare costs by providing services at a fixed cost and reducing unnecessary services, aligning with healthcare provider incentives to minimize moral hazard. The shift from fee-for-service to models like HMOs is significant, along with ACA regulations such as cost caps and mandatory EMRs, signaling a move towards greater efficiency in healthcare.
Step-by-step explanation:
The concept of managed care helps control healthcare costs by providing a fixed cost service model, which reduces variation in clinical practice and ensures a standard of care for conditions like hypertension. Transitioning from fee-for-service, where providers are paid based on the services they perform, to a system dominated by health maintenance organizations (HMOs) creates a fixed payment structure per patient. This managed care model aligns healthcare provider incentives to reduce the moral hazard by limiting unnecessary services, while fee-for-service potentially increases healthcare consumption.
Changes in the healthcare system were also propelled by legislative measures such as the Affordable Care Act (ACA), which introduced regulations like administrative cost caps and the switch to electronic medical records (EMRs). These changes were aimed at controlling cost increases in healthcare. Moreover, the adoption of efficiency and standardization measures, including telemedicine and AI, reflects the shift towards a mass production model in the healthcare industry.