We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Health

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What is Managed Care?

Nicole Madison
By
Updated: May 17, 2024
Views: 66,539
Share

Managed care is an approach to healthcare intended to streamline services and provide healthcare that is quality and cost effective. Through supervision, monitoring, and advising, managed care programs seek to ensure a certain standard of care, measure performance, and control costs. Additionally, some managed care plans seek to assist members in staying healthy through prevention.

Managed care plans typically cover some or all of the costs of obtaining healthcare services. Members of such plans are usually encouraged, if not required, to seek services from within a network of approved providers. Some managed care plans allow members to obtain services from providers outside the network. However, such plans usually cover less of the bill when a participating provider is not used.

Managed care plans include utilization review components intended to oversee and keep track of the types and amounts of services obtained by members. Provider reimbursement methods are another primary component of managed care plans. These methods are used to discourage members from receiving healthcare services that are deemed unnecessary, according to the guidelines of the plan.

In the interest of preventing members from obtaining unnecessary services, many managed care plans require members to obtain approval before receiving certain services. Another method of preventing frivolous care involves providing financial incentives to providers for eliminating inessential services. Other methods of controlling superfluous costs are used as well.

Preferred provider organizations (PPOs), health maintenance organizations (HMOs), point-of-service (POS), and primary care case management (PCCM) programs are the four most common types of managed care arrangements. PPOs work to lower healthcare costs by contracting with a network of providers. Each of the providers in this network agrees to offer services at lower than normal reimbursement rates. Depending on the plan, network providers must meet specific requirements in order to participate in the program.

HMOs have provider networks that are entirely exclusive. Often, an HMO will use primary care physicians (PCPs) as gatekeepers for member care. Basically, each member is assigned or chooses a PCP who is responsible for providing general care, as well as arranging for any necessary referrals to specialists or hospitals.

Other HMOs operate differently. They allow members to seek services from any approved network provider or specialist, without a referral. Many HMOs have reimbursement systems in place, as well as other methods to prevent unnecessary services and costs.

POS managed care plans allow members the choice of using providers outside of or within the approved provider network. Members who seek care from providers inside the network pay less than those who use providers outside the network. Often, these plans require gatekeepers to authorize certain services within the network. However, such authorization is typically not required for care sought outside the network.

PCCM managed care plans operate exclusively within the bounds of the Medicaid program. In such plans, Medicaid pays each PCP a monetary amount to manage the care of plan members. Providers are reimbursed for providing healthcare services on a fee-for-service basis as well.

Share
WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Nicole Madison
By Nicole Madison
Nicole Madison's love for learning inspires her work as a WiseGeek writer, where she focuses on topics like homeschooling, parenting, health, science, and business. Her passion for knowledge is evident in the well-researched and informative articles she authors. As a mother of four, Nicole balances work with quality family time activities such as reading, camping, and beach trips.

Editors' Picks

Discussion Comments
By aaaCookie — On Feb 22, 2011

Managed care definitely has some negative effects. My father's company required us to be a part of one when I was growing up, but I look forward to hopefully not needing one in my own adult life, especially with health care reform actively trying to fix things.

By suntan12 — On Feb 17, 2011

I used to have a HMO health plan and although it was cheaper than a PPO plan I did not like that I could not see the doctor that I wanted.

I had to instead see a doctor that was in the network. I ended up paying out of pocket to see my regular doctor and the following year I had my husband sign us up for a PPO plan.

The PPO plan was more expensive but I was able to see my doctor for preventive visits and any operations would be paid up to 75%.

I only paid about $2,000 for having my son because the insurance picked up the rest. I could not see using a different doctor for my delivery. He delivered my first child and I could not see anyone else delivering my baby.

If your doctor happens to be in the HMO plan then it would actually make sense to stick with an HMO, but for me it did not make any sense.

Nicole Madison
Nicole Madison
Nicole Madison's love for learning inspires her work as a WiseGeek writer, where she focuses on topics like...
Learn more
Share
https://www.wisegeek.net/what-is-managed-care.htm
Copy this link
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.