Monday, July 27, 2009

What Is Managed Care Health Insurance?

The managed care system is intended to reduce wasteful spending while ensuring proper care

Source: StockMonkeys.com
Managed care health insurance is designed to reduce the amount of time wasted on frivolous issues, and the unnecessary expenditures by insurance companies to physicians treating hypochondriacs.

Insurance companies have created their own internal networks of physicians who have agreed to provide services to covered members at an acceptable rate. By participating in such a network, a provider gains significantly more exposure to potential new patients than if she chooses to work outside the insurance network.

Function


The purpose of managed care health insurance is to provide members with services and treatment in an efficient and cost-effective manner, while minimizing unnecessary administrative tasks and reducing the amount of time wasted by providers.

The managed care concept was devised as a way of streamlining member services into a formal and predictable series of steps, thereby eliminating as many surprises as possible and ensuring that only the most necessary treatment was provided to patients.

Also, the managed care concept guarantees participating physicians and facilities a steady stream of income and new patients, reducing the likelihood that the insurance carrier’s network would be lacking in any area.

Types


In the United States, there are two major types of managed care health insurance plans: HMOs and PPOs. An HMO, or health maintenance organization, and a PPO, or preferred provider organization, work in exactly the same manner with respect to services provided by participating doctors and hospitals.

There are a few additional variations of both HMOs and PPOs, often referred to as POS or EPO plans, and each plan type has its own pros and cons. However, there is little difference, if any, in how the program works when an insured person seeks services from a participating provider.

Features


A managed care health insurance plan restricts members to a pre-defined group of physicians and facilities that has contracted with the carrier to provide medical treatment to covered individuals at price points within certain guidelines.

As long as the member receives necessary medical treatment from within this network, all costs are covered by the insurance company save for a small copay or deductible.

Benefits


Perhaps the most powerful aspect of a managed care health insurance plan is the fact that a member may rest assured that the portion of the cost of his treatment for which he will be responsible is entirely visible.

There should be no surprises or additional expenses that the member must pay. All financial responsibility on the part of the patient is disclosed in the insurance contract.

Warning


Members of a managed care health insurance plan, except those covered by a PPO, must remember that the cost of their treatment is only paid by the insurance carrier if said treatment is rendered by a participating in-network provider.

If a member receives services from a provider who is not contracted with the insurance carrier, all invoices are the direct responsibility of the individual.

References


Who Sets The Cost?
Managed Care Health Insurance

Resources (Further Reading)


An Overview of Managed Care
The Rise and Fall of Aetna




This article is a Twisted Nonsense Exclusive! (07/27/2009)