What is Managed Care?

Managed care is a system to provide health care that controls how health care services are delivered and paid. Managed care has grown quickly because it offers a way of predicting and controlling health care costs. There are different types of managed care organizations, such as health maintenance organizations (HMOs), and preferred provider organizations (PPOs). HMO and PPO plans are different because they pay for and control health care services in different ways. In general, the term managed care organization (MCO) is used to describe all of these different types of managed care. MCO is a broad generic term for organizations involved in managed care.

Managed care is a type of health care system that:

• delivers health care through a network of providers
• determines the prices for services
• coordinates services
• controls how patients use services.

Managed care organizations (MCOs) do what health insurers did in the past--collect premiums to pay for your health care. However, MCOs add additional steps in the process of obtaining health care. These steps are intended to reduce the cost of providing health care by eliminating unnecessary or ineffective procedures.

MCOs use the premiums to pay doctors and hospitals a fixed amount before they provide you with any care or services.

Because MCOs must pay for your care within that fixed amount, they should have an incentive to make sure you get basic health care for problems before they become serious. As a result, if you get your health care from a managed care plan, the way you arrange for and receive your care is likely to be different than before you joined a PPO or HMO.

Before managed care:

• you were responsible for where and how you got your care;
• you went directly to your doctor or a specialist for various tests or procedures;
• you paid for services out of your own pocket and were paid back by your health insurer;
• you sent in the paperwork to get paid by your insurer; and
• your provider got paid a fee every time they saw a patient/ consumer.

Now, in managed care organizations:

• you pick a primary care provider (PCP) who coordinates your health care;
• you must get a referral from your PCP before getting special tests or procedures or seeing a specialist;
• you are not responsible for paying for care (you may have to pay a small co-payment at each visit);
• you do not have to send in paperwork, (your providers are paid by the MCO);
• and your PCPs and some other providers are paid a "capitation" (see definition) for each patient/consumer.

Is Managed Care An Improvement?

Depending on your situation, and how much control and responsibility you want in your health care, managed care can offer both positive features and possible problems.

Positive Features

• generally covers preventive services,
• eliminates paperwork to file insurance claims,
• eliminates or reduces out-of-pocket expenses,
• secures access to medical care through a PCP.

Possible Problems

• limits providers you can use to those in plan network,
• services not determined "medically necessary" will be denied,
• can take longer to get referred to specialty care,
• lack of experienced providers serving people with disabilities.

Who Uses Managed Care?

Managed care now affects almost everyone who has health insurance and many employers and publicly-funded programs are using it as a way to provide health services. People who are likely to use managed care include:

• employees who get their health insurance through their employer
• people who are insured through the government (either through Medicare or Medicaid)
• people who may purchase their own individual insurance.

What About People with Disabilities and Other Special Health Care Needs?

For people with disabilities, who often have varying levels of need and multiple health care needs, managed care offers the potential to allow for greater flexibility in services and better coordination of care. However, most managed care organizations have little hands-on experience in serving individuals with disabilities. Many of the systems and providers MCOs use may need to be adapted to ensure that individuals with a disability have equal access to quality health care. Efforts must be made by MCOs to identify and accommodate the needs of people with disabilities and their family members in this new system. Many managed care plans will not pay for or will only pay a small portion of the bill for certain types of services, such as mental health care, physical therapy or long term care.

What's Next?

The current challenge for MCOs is to successfully include individuals with disabilities and special health care needs into a system created for individuals with typical health needs. The challenge to you, as a health care consumer, is to find health care that meets your needs. You already understand your own needs. The next step is to understand how the managed care system works and use it for you and your family members.