Managed Care evolved as a means for controlling the skyrocketing healthcare costs under the traditional Fee-for-Service system. It is a health care system that is expressly designed to manage the delivery of health services in an efficient, cost-effective manner. Today, well over half of all Americans with health insurance coverage have a managed care health policy. It is also the most common health plan offered by employers.
The two leading Managed Care Organizations (MCOs are the Health Maintenance Organizations (HMOs) and the Preferred Provider Organizations (PPOs).
Health Maintenance Organizations (HMOs)
The term “health maintenance” derives from HMOs’ emphasis on preventive care, which is based on the idea that keeping its members healthy, it will avoid more the costly medical expenses of a preventable condition. To this end, HMOs provide preventive care such as well-baby visits, mammograms, immunizations and physicals.
The HMO is both the insurer and the healthcare provider, with its own network of healthcare personnel and facilities. The HMO has its own hospitals and clinics, and either employs its own health care personnel, or contracts with a network of individual doctors and medical practices to deliver services
The HMOs are the most restrictive of the managed care plans, as they strictly limit your choices of benefits, procedures and healthcare providers. Your choice of doctors and hospitals, for example, is limited to its network of healthcare providers. If the required care requires a provider outside the network, express authorization from your primary care physician must be obtained prior to getting this service. Exceptions are made for emergency care.
HMOs typically require you to select a primary care physician from the doctors within its network. This doctor manages every aspect of your medical care. If the services of a specialist are required, your primary physician must provide and authorize a referral for this care. Any additional services such as lab tests or x-rays also require his/her pre-authorization. In this sense, your primary care physician acts as a gatekeeper fro the HMO, helping minimize costs by eliminating the use of services that are not medically necessary.
A co-payment is required for each doctor visit or emergency care. Unlike the Fee-for-Service plans, however, where claim forms are required for doctor visits, a member card is all that is required if you have HMO coverage.
Whereas the Fee-for-Service plans, require claim forms for doctor visits, under the HMO, all you need is a member card. The doctor’s office uses this to verify coverage and to coordinate billing for your care with the HMO. A co-payment must be made at each doctor visit as well.
PROS
§ These are the least expensive of all health care plans.
§ It provides comprehensive health care which includes preventive and emergency care
§ Aside from your monthly premium, there are little or no out-of-pocket expenses
§ HMOs place great emphasis on preventive care, and provide coverage for it.
§ There is far less paperwork involved under an HMO health plan
CONS
§ If your primary care physician is not part of the network, you will have to switch doctors or else pay for the care out-of-pocket.
§ Though they are the least expensive plans, HMO health plans often limit coverage or access to benefits in their bid to cut costs.
§ There is a longer waiting period for doctor and specialist appointments than there are under the Fee-for-Service and PPO health plans.
Preferred Provider Organization (PPO’s)
The PPO is a cross between the Fee-for-Service and HMO. Like the HMO, PPOs contract with a number of hospitals, doctors and other health care professionals to deliver health services at discounted fees. Under a PPO health plan, however, you can visit any of the health providers within this network, and pay the same agreed-upon discounted fee. This form of managed care been described as the equivalent of a discount buying club for healthcare.
Other similarities to the HMO include:
*A copay for your doctor visits
*An emphasis on preventive care
*No claim forms are required to get coverage for medical care
*A requirement to select a primary care physician to manage your medical care
Just like the Fee-for-Service plans, you may choose to get medical care from a non-network provider. However, you may only be eligible for limited coverage for that service, and it will generally cost you more out-of-pocket. In some cases, coverage may even be denied.
PROS
*PPO plans give you more flexibility and control in making decisions over your own healthcare.
*You can see any doctor within the PPO network, rather than one primary care physician
You do not need a referral to get to see a specialist
*Like the HMO, PPOs provides comprehensive health care including preventive and emergency care
CONS
*PPO plans are more expensive than HMOs in monthly premium
*Out of pocket expenses such as deductibles and co-insurance add to the costs of your health insurance.
