Managed Care

Definition

Managed care is a system of health care delivery designed to manage cost, utilization, and quality. It is utilized by various health care plans and organizations. By negotiating contracts with health care providers and medical facilities, managed care plans offer a network of health providers that offer services at reduced costs. Members often benefit from exclusive treatment rights, lower premiums, and co-payments. Properly managed, these networks can be extremely cost-effective for both employers and employees.

Examples

Health Maintenance Organization (HMO): An HMO plan requires members to choose a primary care physician and get referrals for specialist services. It typically only covers care within the network.
Preferred Provider Organization (PPO): A PPO plan offers more flexibility by allowing members to see any health care provider but encourages using network providers to minimize out-of-pocket costs.
Exclusive Provider Organization (EPO): EPOs are similar to PPOs but do not cover any out-of-network care except in emergencies.
Point of Service (POS): A combination of HMO and PPO plans, POS plans require referrals for out-of-network care to be reimbursable at the out-of-network rate.

Frequently Asked Questions (FAQs)

Q1: What are the benefits of Managed Care?

A1: Managed care benefits include lower premiums, reduced out-of-pocket expenses, coordinated care, and preventive services that can lead to better health outcomes.

Q2: How does managed care control costs?

A2: Managed care controls costs through negotiated rates with providers, requiring pre-approval for certain services, promoting preventive care, and coordinating patient care to avoid unnecessary treatments.

Q3: Do managed care plans cover out-of-network providers?

A3: Coverage for out-of-network providers depends on the type of managed care plan. HMOs generally do not cover out-of-network care, whereas PPOs and POS plans offer some level of coverage, typically at a higher cost.

Q4: What is utilization management in managed care?

A4: Utilization management involves reviewing the necessity, efficiency, and appropriateness of health care services provided to patients. This can include pre-authorization, concurrent review, and retrospective review.

Q5: Can employers choose which managed care plan to offer?

A5: Yes, employers can select from different types of managed care plans based on what benefits they want to offer their employees and the associated costs.

Primary Care Physician (PCP): A health care provider who acts as a patient’s main doctor and coordinates other specialized care the patient might need.
Referral: Authorization from a primary care doctor for a patient to see a specialist or get certain medical services.
Network: A group of doctors, hospitals, and other health care providers that a managed care plan contracts with to provide services at negotiated rates.
Co-payment: A fixed amount a member pays for a covered health care service, usually paid when you receive the service.
Pre-authorization: A requirement that certain services approved by the health insurance provider before they are provided to ensure coverage.

Online References

Centers for Medicare & Medicaid Services (CMS): Managed Care
National Committee for Quality Assurance (NCQA): Managed Care Overview
HealthCare.gov: Types of Health Insurance that are Managed Care

Suggested Books for Further Studies

“Essentials of Managed Health Care” by Peter R. Kongstvedt
“The Managed Care Answer Book” by Mari Edlin
“Managed Care: A Practical Guide” by Bette McNeece and Barry Sharpe
“Understanding Health Insurance: A Guide to Billing and Reimbursement” by Michelle Green and Jo Ann Rowell

Fundamentals of Managed Care: Health Care Basics Quiz

### What is managed care primarily designed to do? - [x] Manage cost, utilization, and quality of health care. - [ ] Exclusively provide care to uninsured individuals. - [ ] Offer only out-of-network coverage. - [ ] Ensure patients pay higher premiums. > **Explanation:** Managed Care is primarily designed to manage the cost, utilization, and quality of health care services to provide more affordable and coordinated care. ### Which type of managed care plan generally requires members to choose a primary care physician? - [x] Health Maintenance Organization (HMO) - [ ] Preferred Provider Organization (PPO) - [ ] Exclusive Provider Organization (EPO) - [ ] Point of Service (POS) > **Explanation:** An HMO requires members to choose a primary care physician who coordinates their healthcare and provides referrals to specialists. ### What does a PPO plan offer that an HMO does not? - [ ] Mandatory primary care physician assignment - [ ] Exclusive in-network care - [x] Flexibility to choose out-of-network providers - [ ] No need for any referrals > **Explanation:** PPO plans offer more flexibility by allowing members to see any health care provider, although using network providers minimizes out-of-pocket costs. ### What is the purpose of a referral in managed care? - [ ] To increase patient co-payments. - [ ] To authorize any out-of-network visits. - [ ] To because primary care physicians can't treat any illness. - [x] To ensure specialist services are medically necessary. > **Explanation:** Referrals ensure that specialist services are medically necessary and help coordinate patient care within the managed care framework. ### Which type of managed care plan is a mix of HMO and PPO features? - [ ] Health Maintenance Organization (HMO) - [ ] Preferred Provider Organization (PPO) - [ ] Exclusive Provider Organization (EPO) - [x] Point of Service (POS) > **Explanation:** POS is a type of managed care plan that combines elements of both HMO and PPO plans, where members may need a referral for out-of-network care. ### What is one key way managed care plans control health care costs? - [ ] By significantly raising premiums annually. - [x] Negotiating reduced rates with healthcare providers. - [ ] Providing only emergency services. - [ ] Eliminating all out-of-pocket costs for members. > **Explanation:** Managed care plans control costs by negotiating reduced rates with healthcare providers and institutions within their network. ### What is utilization management in a managed care context? - [x] Reviewing the necessity and efficiency of services. - [ ] Assigning healthcare providers to patients randomly. - [ ] Reducing premiums arbitrarily. - [ ] Ensuring no patient receives preventive care. > **Explanation:** Utilization management involves reviewing healthcare services to ensure they are necessary, efficient, and appropriate. ### Who can benefit from lower premiums in managed care plans? - [ ] Only the elderly population. - [ ] Uninsured individuals. - [x] Both employers and employees. - [ ] Only government employees. > **Explanation:** Both employers and employees can benefit from lower premiums in managed care plans due to negotiated rates and cost-sharing features. ### What aspect does managed care emphasize to improve health outcomes? - [ ] High co-payments - [ ] Limited care coordination - [x] Preventive services - [ ] Exclusive out-of-network care > **Explanation:** Managed care emphasizes preventive services to keep patients healthy and avoid more expensive treatments down the line. ### Who typically reimburses out-of-network care in an EPO plan? - [ ] EPO always fully covers any out-of-network care. - [ ] EPO plans do not enforce any restrictions on out-of-network care. - [ ] Employers are solely responsible for out-of-network care costs. - [x] EPO plans typically do not cover out-of-network care except emergencies. > **Explanation:** EPO plans generally do not cover out-of-network care, except in emergencies, encouraging members to use network providers.

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