This is a continuation of our series on health insurance plans. Here, we will discuss one of the most common types, managed care. Managed care can be intricate, so it will be explained in several articles.
What is Managed Care?
Managed care started more than 30 years ago as a means of controlling then-rising health insurance costs. The term, “managed care,” common to many, had a stigma of suggesting lower quality health care. There may have been a time when that had some truth, but managed care has become so integrated into the health care delivery system, that the stigma is all but gone. As health care costs continue to rise, many believe that managing care delivery will continue to be an important way to provide quality care to more and more people.
Managed care can be very confusing to Seniors and others. Many are used to relying on the Human Resource professionals where they work for help understanding health insurance benefits. But if you are either fully retired, starting out in a new stage of life yet too young for Medicare, or in your own new business and looking for individual insurance, the managed care maze can be baffling. There are also varieties of managed care arrangements for Seniors who are on Medicare!
Managed Care is Not Insurance
In general, managed care is not insurance as the term “insurance” is typically used. Instead, think of it as a delivery system. It involves the combination of health care financing and the delivery of health care services into a single unit. Stated a different way, it is a mechanism by which a bundle of health care services is delivered to a member of the managed care entity. Note that we did not use the word “insured.” In the world of managed care, the people obtaining services through the system are called “members.” Therefore, Seniors who enter managed care arrangements will need to get used to different terminology, of which this is only one; there are more to come.
Choice is Limited in Managed Care
A big way in which managed care differs from traditional health insurance is that there is no direct relationship between the provider of the medical services and the entity (an insurance company) that pays for the services. Traditionally, like in a fee-for-service arrangement, the provider renders a medical service, issues a bill and, within the limits of the insurance policy, the insurer pays all or part of it directly to the provider. There, the patient could obtain services from whomever he or she wanted who would accept the amount of insurance reimbursement. In managed care, the plan, such as a Health Maintenance Organization (HMO), negotiates terms and reimbursement rates with a network of care providers. The patient (or “member”) has access to the network because of his or her membership in the HMO. In some cases, the patient is allowed to go “out of network,” but reimbursements and co-payments may differ from those applicable to an in-network provider. “Out of network” means that the provider rendering care is not a participating provider in the network. If there is not a provider in the network who is willing or able to furnish the needed service, such as a speciality provider, any additional co-payment may be waived.
For more information about how your care gets financed in a managed care environment and how to protect yourself and your rights when choosing managed care for your health care services, see Spotlight on Health Care: The Inside Scoop on the Business of Managed Care.