The term "managed care" has become a buzzword -- and not everyone knows what it
means. Simply stated, managed care refers to health care insurance plans designed
to provide care at the lowest possible cost. In order to make coverage affordable,
managed care plans require that patients follow certain rules. (We'll get to those
rules shortly.) The three major types of managed care plans are:
- Preferred Provider Organizations (PPOs)
- Health Maintenance Organizations (HMOs)
- Point-of-Service (POS) plans.
What do each of these plans offer? Take a look ...
Preferred Provider Organizations (PPOs)
This plan type closely resembles a Fee-for-Service plan. A PPO has arrangements
with a network of doctors, hospitals and other providers who have agreed to accept
lower fees from the insurer for their services. As a result, your cost sharing should
be lower than if you go outside the network. In addition to the PPO doctors making
referrals, plan members can refer themselves to other doctors, including ones outside
the plan. This makes it a best-of-both-worlds option for many patients: lower costs
in the network, but flexibility to leave the network if necessary.
- If you go to a doctor within the PPO network, you will probably pay a copay (a set
amount for certain services -- like $15 for a doctor visit or $10 for a prescription).
Your coinsurance will be based on lower charges for PPO members.
- If you choose to go outside the network, you will have to meet the deductible and
pay coinsurance based on higher charges. You might also have to pay the difference
between what the provider charges and what the plan will pay.
Health Maintenance Organizations (HMOs)
HMOs offer members an array of health benefits -- usually including preventive care
-- for a set monthly premium. The rule? You must use the health care providers and
facilities within the HMO network in order to receive coverage, unless it's an emergency.
Most HMOs require a small copay for each visit to a doctor or plan facility. Some
require no payment when you visit doctors. (These plans usually have slightly higher
monthly premiums.) HMOs generally provide preventive care like annual check-ups,
flu shots, hearing tests, etc., at lower out-of-pocket costs to you. This makes
them highly preferred for many people who don't want to pay huge fees for an annual
physical, a cholesterol check or other necessary tests.
There are several types of HMOs:
- The Staff Model HMO - Here the doctors are actual employees of
the health plan, and you see them at a central medical center or office.
- Individual Practice Associations (IPAs) - This type of HMO contracts
with outside physician groups or individual doctors who have private practices,
and you see them in their own offices.
Primary Care Physicians:
A partnership with your doctor
An HMO will typically provide you with a list of physicians. From that list, you
choose a "primary care physician." This doctor will serve as your chief medical
officer. He or she will coordinate your care, see you when you are sick and make
any decisions about whether you should see a specialist.
What kind of doctors are primary care physicians?
Usually, they fall into one of the following specialties:
- Family practice doctors or general practitioners: These doctors
are trained to diagnose and treat a variety of health conditions. If you are young
and in good health, a general practitioner is your best bet. Many HMO members select
the same general practitioner for their entire family.
- Internists: Specializing in internal medicine, these physicians
are trained to treat health conditions like diabetes and cardiovascular disease.
If you are managing high blood pressure, heart disease or diabetes, an internist
is a wise choice.
- Pediatricians: These doctors only treat children, usually under
the age of 12.
- OB/GYN: Some plans allow women of childbearing age to select an
OB/GYN as their primary care physician.
- Other types of doctors: Some plans may allow a specialist to be
selected as a primary care physician. For example, a diabetic may elect to have
an endocrinologist (in the HMO plan, of course) as his primary care physician.
How do you pick a primary care physician?
Most HMOs only offer a list of doctors' names. How can you find out more about them?
- If you know others in the plan, ask for recommendations.
- Make appointments to meet with doctors in your area to find one who is right for
- If the plan's doctors are located in the same facility, ask the staff nurse for
Can you use your current doctor?
If he or she does not belong to the HMO, you will have to switch to a doctor who
does. But don't worry that once you pick a primary care physician, it will be set
in stone. Most plans allow you to switch your primary care doctor several times
a year. If you don't like one, select another.
Blurring the lines of Fee-for-Service and managed care
While Fee-for-Service and managed care are different, the differences can get a
little fuzzy. Many managed care plans now contain Fee-for-Service elements. Conversely,
almost all Fee-for-Service plans apply managed care techniques to contain costs
and guarantee suitable patient care. What does this tell you? Read the different
plan descriptions carefully! You may find that you get Fee-for-Service options through
your local HMO at a substantial savings. Or you may discover that with all the caveats,
your Fee-for-Service plan walks and talks more like a restrictive managed care plan
and is not worth the extra out-of-pocket expense.
Guidelines in every plan
Whether you choose a Fee-for-Service plan, a PPO or an HMO, you will find that your
plan has certain rules you have to follow.
Let's say you fall and break your leg while rock-climbing on vacation, and you are
rushed to a hospital that is not part of your HMO network. Your emergency medical
coverage is most likely included in your plan. After you've been patched up, however,
the medical team feels you would be best served by tricky follow-up knee surgery.
Chances are, either you or your doctor will have to call your insurance provider
to get the go-ahead for the non-emergency treatment. This is known as "pre-authorization."
It occurs when your insurer must approve a procedure before you actually have it.
Utilization review is a fancy term for the process used by plans to determine whether
a specific medical or surgical service is appropriate or medically warranted. For
example: You believe your severe neck pain will be alleviated by a new cervical
disk surgery you read about on the Internet. You've talked to your physician about
it, and he's familiar with the procedure, but the practice is not regarded as absolutely
necessary for your condition. The Medical Review Specialist may be brought in to
make the final decision about whether or not your insurance will cover the cost
of the operation.