Managed Care: A Choice of Plans
Managed care plans provide discounts for medical necessities. In many instances, insurers enter into contracts with doctors, hospitals, and other healthcare suppliers. These insurers may be large healthcare companies or an employer acting with the assistance of a large healthcare company. In other instances, companies hire some or all of the medical staff themselves. The staff that they hire or those who have contractual agreements are said to be "in network."
Patients buy into a network, paying a basic fee, or premium, each month, and then paying more as they need services. These fees are generally lower than those for traditional indemnity insurance plans. Although some of these managed care plans are not technically "insurance" policies, they operate in much the same way: relying on the fact that since not everybody needs every service all the time, there will be money available to pay for services that fewer people need.
But, with these discounted fees come strict rules that you and your healthcare professional must adhere to. Critics accuse managed care companies of making the rules too tough and changing them too often without warning. Doctors complain that fees are so low that they have to over-schedule—limiting the amount of time they can spend with each patient. Furthermore, managed care plans require a growing number of office workers to handle the paperwork. And then there is the question of "Who is really making the medical decisions: doctors, patients, or insurance companies?"
However, the fact remains that few of us can afford to pay the full rate for even one injury or illness. A simple fracture can cost thousands of dollars. And however expensive the monthly premium, most plans at least put a cap on what you could potentially have to spend, and do pick up the bulk of expenses during serious illnesses.
The Basic Outline
Many employers provide managed care plans as a benefit, paying part of the monthly premium. Otherwise, individuals may buy into the plans on their own, even in addition to government-sponsored plans like Medicare.
Many plans now have more options, and some changes have been made to allow patients more choices. But with these increased options have come greater costs and a growing emphasis on wellness—in particular, a patient's own responsibility to live a healthful life.
The trouble here is that maintaining health and preventing illness can be expensive, too. Consider, for example, just the annual cost of inoculations, vaccinations, screenings, and physical exams a family can expect each year. Those are costs that we pay when we are well. Illness and injury add even more to even the most basic family medical expenses.
Most plans charge a "co-pay" for visits to doctors offices, clinics, and hospitals. The patient's cost share usually goes up each year as the basic monthly premiums rise with inflation. Over the past several years, patient expenses have gone up even as the percentage of covered care has gone down, in part because medical costs rise with every advance in treating illnesses. In the end, managed care plans should be considered an aid in paying for care. No plan pays for it all.
Some insurance plans allow you the freedom to see doctors "out of network,” but even so, they put strict regulations on what charges they will cover from these doctors. They accept only those charges they deem “reasonable and customary,” which frequently amount to less than the actual overall charge. You, the insured, have to pay the difference.
Types of Plans
HMOs: Health Maintenance Organizations
This common form of managed care plan is not an insurance policy per se, but a parent organization of doctors and other health professionals, on staff or connected through a network. With few exceptions, these plans cover only doctors, hospitals, labs, and others within the parent organization, but the range of care is virtually complete, and the prices are generally the lowest. Additionally, most drugs are covered. Most HMOs require that you select a "primary care doctor," whose permission, called a "referral," you need in order to see a specialist or enter a hospital (except in an emergency).
PPOs: Preferred Provider Organizations
These plans generally have a higher monthly premium than HMOs and cover only a percentage of your care (eg, 80%). In addition to a co-pay, they charge a "deductible" which is the minimum amount you must spend on your own health services before the PPO kicks in. While PPOs have "in-network" doctors and hospitals, you can seek care from specialists or other doctors within this network without necessarily obtaining a referral from a primary care provider. And you can go outside of network, although it will cost you much more for each visit.
POS: Point of Service Plans
This is a sort of cross between the PPO and HMO. Generally, these plans charge you less for using in-network providers and require you to have a primary care doctor, though you may seek a specialist out of the network on your own at a higher cost to you.
One rule of thumb is that plans that cost more per month generally provide you with more choices, but also may cost more when a service is provided.
Some plans provide drugs discounts. Others do not, requiring you or your employer to select another company for your prescriptions if you want to avoid paying full charges. Preventive dental and vision coverage may be provided by HMOs, but may not be covered by other types of plans.
America's Health Insurance Plans
US Department of Labor
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Last reviewed June 2010 by ]]>Brian Randall, MD]]>
Please be aware that this information is provided to supplement the care provided by your physician. It is neither intended nor implied to be a substitute for professional medical advice. CALL YOUR HEALTHCARE PROVIDER IMMEDIATELY IF YOU THINK YOU MAY HAVE A MEDICAL EMERGENCY. Always seek the advice of your physician or other qualified health provider prior to starting any new treatment or with any questions you may have regarding a medical condition.
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