Managed care plans provide deep discounts for medical necessities. In many instances, insurers enter into contracts with doctors, hospitals, and other healthcare suppliers. These insurers may be large healthcare companies or an employer acting with the assistance of a large healthcare company. In other instances, companies hire some or all of the medical staff themselves. Those whom they hire or with whom they have contractual agreements are said to be "in network."
Patients buy into a network, paying a basic fee, or premium, each month, and then paying more as they need services. These fees are generally considerably lower than those for traditional indemnity insurance plans (eg, Blue Cross/Blue Shield). Although some of these managed care plans are not technically "insurance" policies, they operate in much the same way: relying on the fact that since not everybody needs every service all the time, there will be money available to pay for services that fewer people need.
But with these discounted fees come strict rules that you and your healthcare professional must adhere to. Critics accuse managed care companies of making the rules too tough and changing them too often without warning. Doctors complain that fees are so low that they have to over-schedule—limiting the amount of time they can spend with each patient. Furthermore, managed care plans require a growing number of office workers to handle the paperwork. And then there‘s the perennial question of who is really making the medical decisions: doctors, patients, or insurance companies?
However, the fact remains that few of us can afford to pay the full rate for even one injury or illness. A simple fracture can cost tens of thousands of dollars. And however expensive the monthly premium, most plans at least put a cap on what you could potentially have to spend, and
do
pick up the bulk of expenses during serious illnesses. Like it or not, managed care is here to stay.
Many employers provide managed care plans as a benefit, paying part of the monthly premium. Otherwise, individuals may buy into the plans on their own, even in addition to government-sponsored plans like Medicare.
Over the past few years, many plans have expanded their options, and some changes have been made to allow patients more choices. But with these increased options have come greater costs and a growing emphasis on wellness—in particular, a patient's own responsibility to live a healthful life.
The trouble here is that maintaining health and preventing illness can be expensive, too. Consider, for example, just the annual cost of inoculations, vaccinations, screenings, and physical exams a family can expect each year. Those are costs we pay when we are well. Illness and injury add even more to even the most basic family medical expenses.
Most plans charge a "co-pay" for visits to doctors offices, clinics, and hospitals. The patient's cost share usually goes up each year as the basic monthly premiums rise with inflation. Over the past several years, patient expenses have gone up even as the percentage of covered care has gone down, in part because medical costs rise with every advance in treating illnesses. In the end, managed care plans should be considered an aid in paying for care. No plan pays for it all.
Some insurance plans allow you the freedom to see doctors "out of network,” but even so, they put strict regulations on what charges they’ll cover from these doctors. They accept only those charges they deem “reasonable and customary,” which frequently amount to less than the actual overall charge. You, the insured, have to pay the difference.
This common form of managed care plan is not an insurance policy per se, but a parent organization of doctors and other health professionals, on staff or connected through a network. Some 50 million Americans are members of HMOs. With few exceptions, these plans cover only doctors, hospitals, laboratories, and others within the parent organization, but the
range
of care is virtually complete, and the prices are generally the lowest you can find. Additionally, most drugs are covered. Most HMOs require that you select a "primary care doctor," whose permission, called a "referral," you need in order to see a specialist or enter a hospital except in an emergency.
These plans generally have a higher monthly premium than HMOs and cover only a percentage of your care—usually about 80%. In addition to a copay, they charge a "deductible" which is the minimum amount you must spend on your own health services before the PPO kicks in. While PPOs have "in-network" doctors and hospitals, you can seek care from specialists or other doctors within this network without necessarily obtaining a referral from a primary care provider. And you can go outside of network, although it will cost you more for each visit.
This is a form of PPO that generally pays only for doctors within the plan’s network. The advantage of some of these plans is that they function as a kind of cross between an HMO and a PPO, limiting the doctors you may chose but not requiring referrals.
This too is a sort of cross between the PPO and HMO. Generally, these plans charge you less for using in-network providers and require you to have a primary care doctor, though you may seek a specialist out of the network on your own at a higher cost to you.
This is the new kid on the block: a kind of bank account that entails a certain risk. While the monthly fees are low and there is a lot of room for wellness-care, HSAs can cost more out-of-pocket in the event of accident or injury. Individuals pay a low monthly premium and are allotted perhaps $1,000 or $2,000 a year to be spent on health services as desired. The plan includes various discounts, routine care, and copayments. Unused money rolls over to the following year. This plan reverts to traditional managed care with caps on expenses if the fund is depleted, and a high deductible is met.
One rule of thumb is that plans that cost more per month generally provide you with more choices, but also may cost more when a service is provided. Something else to keep in mind is that plans provided through employers don't usually have restrictions on who or what is covered, but plans you buy on your own may, under certain circumstances, exclude pre-existing conditions, which is to say illnesses you had before you joined the plan.
Some plans—generally HMOs—provide drugs discounts. Others don't, requiring you or your employer to select another company for your prescriptions if you want to avoid paying full charges. Preventive dental and vision coverage may be provided by HMOs, but generally not by other kinds of plans.
