Managed-care plans are health insurance policies using which policyholders can avail healthcare facilities at reduced costs. These plans offer comprehensive coverage, including preventive care and routine check-ups for a fixed premium.
Managed care insurance plans have the lowest costs, provided that the insured individual seeks treatment from a network hospital. Such plans also involve less paperwork and come with lower deductibles, helping to make healthcare more affordable. This is a relatively new type of insurance policy developed in the USA to deal with rising healthcare expenses. Today, many countries are adopting various elements of managed care health plans into their medical care system.
How Do Managed Care Plans Work?
Managed care health plans are the least expensive insurance policies as they greatly limit one’s choice of healthcare providers. These plans work with established providers serving all policy members over a specific geographic region.
In traditional fee-for-service health insurance policies, the state directly pays the doctors and hospitals for each service they provide. However, this often allows providers to drive up medical expenses by ordering unnecessary tests and treatments.
With managed care, states sign contracts with MCOs (Managed Care Organisations) to provide medical services via a network of hospitals and doctors. They pay the MCOs a fixed annual fee for each patient, and the MCO agrees to offer their services at reduced costs. However, these plans do not cover any medical costs if they are incurred outside the network.
MCOs try to keep their patients healthy with managed health care by providing regular check-ups, and inoculations and reducing unnecessary treatments. Moreover, states get to leave the job of financing and delivering healthcare entirely to experts.
What are the Different Types of Managed Care Plans?
The following are some of the basic managed care plans:
1. Health Maintenance Organisation (HMO)
In a traditional HMO, one must choose a primary care doctor in the HMO network for all healthcare facilities. Thus, the insured person will have to pay nothing or next to nothing for services received within the network.
However, one will have to pay 100% of the costs out of pocket if they see a doctor outside the network or break any rules.
2. Full-Service HMO
In ‘full service’ HMO plans, people can get physical and mental health services at nominal fees. Insurance companies contract MBHOs (Managed Behavioural Healthcare Organisation) to provide all mental healthcare-related services. When a primary care doctor provides a special referral, one can contact the MBHO provider for mental treatment.
3. Preferred Provider Organisation (PPO)
PPOs are managed care plans closest to a fee-for-service and provide the option to see any doctor, whether in or out-of-network. Doctors, hospitals, and other care providers agree to accept lower fees for their services when taken inside the PPO network.
PPO networks have an established payment system where those seeking care outside the network will have to meet a certain deductible. Insured people will also have a fixed percentage (for example- 20%) of the total medical expenses based on higher charges.
4. Point of Service (POS)
POS plans are a hybrid of HMOs and PPOs, where members can get references outside the provider network and get some coverage. Hence, one gets the flexibility to see in, and out-of-network doctors like PPO but have to provide higher shares. If one’s primary care doctor makes a referral outside the POS network, the plan will cover all or most of the bill.
5. High Deductible Plans (HDP)
Also known as consumer-directed health plans (CDHP), these plans come with large deductibles that families or patients must pay before the insurance takes effect. These plans are becoming more common as employers and health insurance policies require members to take more payment responsibility.
Managed-care plans make preventive care a top priority as a cost-saving measure. They provide routine medical screenings, annual check-ups, and vaccines to help identify problems early.
2. Lower Medical Expenses
With managed care, people do not have to spend significant money on medical treatment, diagnosis, and prescription drugs. These plans provide more coverage for generic medicines, which keep their costs low while providing quality medical care.
3. Provider Network
Health insurance companies contract groups of healthcare providers with reduced rates. Some of these plans require one to use its provider network for healthcare, while others offer more flexibility but have higher costs.
4. Restrictions on Services
Managed-care plans restrict the patient to a certain provider network, and some do not cover any expenses outside it. Thus, patients may have to pay high out-of-pocket expenses to see a doctor outside the network.
Managed-care plans allow patients to pay reduced medical costs out of their own pocket, and some provide great flexibility in coverage. However, it comes with some disadvantages, like issues with referrals and restrictions on where patients can get treatment.
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Q1. What is the role of PCP in a managed care plan?
Ans: The PCP (Primary Care Provider) helps to coordinate all healthcare of an insured person. It provides referrals for specialized care or treatment, often in the provider network.
Q2. How do HMO plans compare against PPO and POS plans?
Ans: HMO plans are the least expensive but do not cover any treatment or medical bills outside its provider network. PPO and POS plans offer more freedom covering a part of the bill if one visits a doctor/specialist outside the network.
Q3. How do managed care plans keep costs of healthcare low?
Ans: Managed-care plans aim to keep patients healthy by encouraging regular check-ups and vaccinations. This keeps the cost down as it eliminates costly treatment and procedures.
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