Health is perhaps the most important aspect of our lives; most people invest much time and money to ensure good health for themselves and their family members. However, even with health insurance coverage healthcare does not come cheap. Given the increasing demand for healthcare services today, it has become essential to reduce the costs in order to make healthcare services available to all. This need for reduced healthcare costs coupled with the need to regulate healthcare services provided by healthcare professionals, has led to the creation of managed care, which helps regulate and optimize services provided by healthcare professionals at comparatively low costs.
What is Managed Care?
Managed care includes processes by which delivery of proper healthcare is managed and maintained at very low costs. The primary aim of managed care is to limit the per capita spending on healthcare by individuals, which in turn reduces the amount spent on healthcare in the country. Managed care can be defined to include either of the following two components:
- Techniques that help reduce the cost of providing health benefits while improving the quality of healthcare to those organizations using such techniques or providing them as services to other organizations; or
- A system whereby people who are enrolled, can avail of healthcare services as well as financial aid for such services, which are regulated and covered by managed care concepts.
History of Managed Care
It is interesting to note that the concept of managed care actually started back in the 19th century, where the system was introduced to take care of the health needs of specific groups like rural residents and lumber, mining and railway workers and their families. In those early days, the enrollees paid a fixed amount to the doctor who then provided healthcare services under a specific agreement. This fee could be charged monthly or annually, and would cover certain health services provided by professionals. This concept, however, was not accepted by the American Medical Association, which fought it tooth and nail and ultimately managed to limit its popularity, even despite a Supreme Court judgment upholding the value of such contracts.
It took until the 1970s for managed care to regain popularity and respect amongst both the doctors as well as the populace. The popularity was largely due to the increasing concern regarding healthcare costs, which led to the search for cost-effective healthcare services. Additionally, the increase in competition in the healthcare market prompted many healthcare organizations to use this route to increase their profits, which incidentally led many to misconstrue the exact meaning and value of managed care.
Goals of Managed Care
With the increasing popularity of managed care, most people, especially opponents to this concept, felt that this was solely a moneymaking opportunity, whereby healthcare providers can get away with providing cheap and irrelevant services and the people are always left for wanting more. However, nothing could be more wrong than this as the chief goals of managed care include the following:
- The primary goal is to provide adequate and the best healthcare to all enrollees at reduced or controlled costs
- Secondly, it aims to ensure that the healthcare so provided is adequate and required by the medical condition of the patient
- Ensuring that such services are provided by appropriate healthcare providers
- Lastly, to ensure that the entire process as well as the environment is not restrictive in any way
Different types of Managed Care Programs
There are three different types of managed care programs available today with varying levels of restrictions and unique features and processes. The three different types include-
- Health Maintenance Organizations (HMO)
- Preferred Provider Organization (PPO)
- Point-of-Service (POS) plans
- Health Maintenance Organizations (HMO)
The following steps and features characterize this managed care plan:
- The HMO enters into contractual agreements with healthcare providers to form a network, which will be accessed by people enrolled with the HMO for healthcare services.
- Members enrolled with such plans can only access those healthcare providers who are part of the network in order to avail healthcare benefits.
- HMO will not pay for any services rendered by professionals who are not part of this network.
- The first stage in this managed care plan is the appointment of a primary care physician, who is also called a gatekeeper. This primary care physician is the main person responsible for providing, arranging, coordinating and authorizing the healthcare needs of any member.
- The primary care physician is also the sole authority under the scheme to provide referrals to specialists. Without obtaining such referrals, specialist consultations will not be covered and paid by HMO.
- This plan is considered to be highly restrictive by many as it restricts the health service providers you can actually visit. However, having said that, it is important to add that this managed care plan is perhaps the least expensive of all plans in terms of out-of-pocket expenses.
- Additionally, this plan does not require much co-payment from the enrollee as most of the payment has to be made well in advance.
- Preferred Provider Organization
This is very similar to HMO and uses the same principle of creating a network or panel of health service providers, who can be approached for healthcare by people who have enrolled in this scheme. The main features of this scheme include:
- Creation of a panel of health service providers who form what is called a provider network. However, this is not as restrictive as the HMO plan as it allows people to approach providers outside the network for healthcare services.
- There is no gatekeeper or referral agent in place who directs and manages your health care needs.
- Incentives are given to those enrollees who approach in-house service providers and these include higher reimbursements, lower co-payments and lower deductibles.
- Lastly, while out-of-network service provider is not forbidden, the enrollee may have to pay as much as fifty percent of the healthcare service costs provided by such healthcare service provider
- Point of Service Plans
This is a beautiful blend of both the above-mentioned plans, namely the HMO and the PPO, where the enrollee gets to choose the kind of plan he or she wants to opt every time he or she requires healthcare services. Given the increased flexibility and freedom of choice provided by this plan, it is slowly increasing in popularity.
- The primary feature of this plan is that the enrollee gets to choose as per his or her requirement and is assured of healthcare services, irrespective of his/her choice.
- There is a network of healthcare service providers, from which the enrollee can choose.
- The option of appointing a primary care physician is given to the enrollee as also the choice of using such gatekeepers for providing referrals.
- If the person uses in-house network services, deductibles, co-pays and co-insurance is low; but if the person uses out-of-network services, then the cost of these aspects increases.
How does Managed Care Work?
Managed care can be availed for curing as well as preventing all kinds of diseases and therefore, is a very important part of overall health care of an individual. Irrespective of the kind of plan you have chosen, the following main areas of focus (as mentioned below), will be part of the managed care process once you have enrolled:
- Choosing a primary care physician who will be a nodal point of reference for all healthcare problems and services.
- Acquiring referrals from your primary care physician, if and when the need to see a specialist arises.
- Acquiring prior authorization in some cases from the primary care physician and insurance company for any hospitalization or diagnostic tests that may be required.
- Creating a treatment plan for those enrollees with serious or long drawn medical conditions.
Managed care plans and processes not only increase profitability of healthcare providers, they also strive to provide excellent and yet low cost healthcare services to individuals. While the actual impact of this system is debatable, one can safely say that this is one step forward in providing adequate and low cost health care to people.
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