Managed Care
Managed care is a term referring to the practice of health insurers managing costs by certain means, set up for the financial benefit of both themselves and their customers. A majority of insurance plans in America, unless they are bought independently by the rich, have a strong managed care component.
Growth of managed care
Managed care came to the forefront of American healthcare after the Health Maintenance Organization Act was passed in 1973, as a way of controlling spiralling costs. At that stage, health maintenance organizations (HMOs) were the insurers implementing such techniques, but this soon grew to encompass preferred provider organizations (PPOs) and even fee-for-service or indemnity options. The effectiveness of managed care has sometimes been questioned, but advocates and critics both have their viewpoints.
The aims of managed care
As set out in the United States National Library of Medicine, managed care options seek to reduce arguably unnecessary costs while trying to maintain a useful quality of care. They do this through a variety of techniques, including:
- Giving facilities, doctors and patients economic incentives to utilize less expensive healthcare,
- Putting limits on the amount of inpatient admissions and how long patients are permitted to stay in hospital,
- Contracting with healthcare providers, so that patients receive more coverage if they choose a provider within the network,
- Closely managing costly cases,
- Setting up programs designed to review the necessity of particular services,
- Establishing incentives for sharing the costs of outpatient surgery,
- Focusing on sharing costs between the recipient and insurer.
Managed care in action
What does managed care mean for you or your family? On one level, managed care plans should reduce many of your medical costs. By restricting the sort of care customers are eligible to claim for, your premiums and deductible can be significantly lowered. This is why comparably restrictive HMOs are far cheaper than PPOs, which offer wider coverage.
Restrictions
However, what about those restrictions? A good example is hospital admissions. Depending on the type of managed care used by your insurance company, the healthcare facility may insist upon approval from your insurer before they will take you in or treat you. In that case, the insurer will look at your circumstances and make a decision as to whether they agree with the need for hospitalization. Without approval from the insurer, you might have to pay the whole hospital bill.
Other forms of managed care include encouraging you to frequently visit your primary care doctor, and to take part in health education programs. This focus on preventative healthcare means that the insurer intends to spend less on major health problems. Plans of this sort may cover you for a substantial amount of preventative care but require you to pay more if you are hospitalized.