A Comprehensive Guide to Define Managed Health Care

Managed health care is a type of health care system that aims to provide high-quality medical services while controlling costs.

It's designed to reduce unnecessary medical expenses by emphasizing preventive care and early interventions.

Managed health care focuses on providing care that is both effective and efficient, which can lead to better health outcomes.

This approach to health care has been shown to reduce medical errors and improve patient satisfaction.

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The Dallas Plan was a groundbreaking concept that allowed individuals to pay a fixed monthly fee for medical care, reducing the financial burden of unexpected medical expenses. This innovative approach to healthcare paved the way for the development of managed care.

In the 1970s and 1980s, managed care continued to evolve and expand, with the introduction of Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs). These new models of care focused on providing comprehensive, coordinated care to patients.

By the 1990s, managed care had become a dominant force in the US healthcare landscape, with millions of Americans enrolled in HMOs and PPOs. This growth was driven by the need for cost-effective and high-quality healthcare services.

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Managed health care comes in various forms, each with its own set of rules and benefits. There are several types of network-based managed care programs, ranging from more restrictive to less restrictive.

A Health Maintenance Organization (HMO) is one such type, where members are assigned a primary care physician who acts as a gatekeeper for their overall care. This physician must refer patients to specialists and pre-authorize non-emergency hospital admissions.

HMOs are licensed at the state level and have a specific set of rules, such as requiring referrals for specialty services. They also have a copayment cost share feature, where members pay a nominal fee at the time of service.

Preferred Provider Organizations (PPOs) are another type of managed care, where providers contract with the organization and offer discounted rates to members. PPOs do not have copayments, but instead offer a deductible and coinsurance feature.

In a PPO, the patient pays 100% of the allowed provider fee up to the deductible amount, and then the insurer pays 80% of the remaining fees. This makes PPOs the least expensive type of coverage.

Point of Service (POS) plans combine features of HMOs and PPOs, allowing members to choose between the two until the service is being used. POS plans have levels of progressively higher patient financial participation, depending on whether they stay within the network or seek out-of-network care.

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A Health Maintenance Organization, or HMO, is a type of network-based managed care program that combines both the financing and delivery of healthcare for its enrollees.

HMOs were first proposed in the 1960s by Dr. Paul Elwood and were later set in law as the Health Maintenance Organization Act of 1973.

In an HMO, each member is assigned a "gatekeeper", a primary care physician (PCP) responsible for the overall care of members assigned.

Services require a specific referral from the PCP to the specialist, and non-emergency hospital admissions also require specific pre-authorization by the PCP.

Typically, services are not covered if performed by a provider not an employee of or specifically approved by the HMO unless it defines the situation to be an emergency.

The HMO concept is licensed at the state level, under a license called a certificate of authority (COA), rather than under an insurance license.

HMOs are protected by federal law from malpractice litigation, on the grounds that the decisions regarding patient care are administrative rather than medical in nature, since the 1980s under the ERISA Act.

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PPO plans are a type of managed health care that can save you money in the long run.

These plans contract with preferred provider organizations, which are networks of doctors and medical professionals who agree to charge discounted rates to patients who are part of the plan.

A membership to a PPO plan allows you to get a substantial discount on services from the designated professionals in the network.

Unlike HMO plans, PPO plans don't have a copayment feature, but instead offer a deductible and a coinsurance feature.

If you have an 80% coinsurance plan with a $1,000 deductible, you'll pay 100% of the allowed provider fee up to $1,000, and then the insurer will pay 80% of the remaining fees.

Charges above the allowed amount are typically written off as a discount by the physician.

PPO plans are often the least expensive type of coverage because you're picking up a substantial portion of the "first dollars" of coverage.

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Private Fee-For-Service (PFFS) plans offer a wide choice of doctors and hospitals, giving you the freedom to select the medical staff and facilities that best suit your needs.

These plans are a traditional kind of health care policy, where insurance companies pay medical staff fees for each service provided to an insured patient.

Basic protection in PFFS plans deals with costs of a hospital room, hospital services, care and supplies, cost of surgery in or out of hospital, and doctor visits.

Major Medical Protection covers costs of serious illnesses and injuries, which usually require long-term treatment and rehabilitation period.

Combining Basic and Major Medical Insurance coverage is called a Comprehensive Health Care Plan.

Policies do not cover some services, so it's essential to review your coverage carefully to understand what is and isn't included.

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Managed health care involves a network of organizations that provide care to patients. These organizations can be made up of physicians, hospitals, and other providers, and they operate with different business models.

Some organizations are group practices without walls, where physicians work together but maintain their own practices. Others are independent practice associations, which contract with a group of physicians to provide service to HMO members.

The total cost of maintaining provider directories is estimated at $2.1 billion annually, and a blockchain initiative was started in 2018 to share the directory. This highlights the complexity and cost of managing provider networks.

Here are some common types of organizations that provide managed care:

These organizations often contract with multiple HMOs, and physicians who participate in them may also serve fee-for-service patients.

An Independent Physician Association (IPA) is a legal entity that contracts with a group of physicians to provide service to the HMO's members.

IPAs are often made up of physicians who are paid on a basis of capitation, which means a set amount for each enrolled person assigned to that physician or group of physicians, whether or not that person seeks care.

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The contract between the IPA and the HMO is not usually exclusive, so individual doctors or the group may sign contracts with multiple HMOs.

Physicians who participate in IPAs usually also serve fee-for-service patients not associated with managed care.

Some common organizations that provide managed care include IPAs, group practices without walls, independent practice associations, management services organizations, and physician practice management companies.

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Provider networks are a crucial part of the healthcare system, and understanding how they work can make a big difference in your healthcare experience.

Insurance companies like UnitedHealth Group negotiate contracts with providers in periodic contract negotiations, which can sometimes lead to disputes, as seen in the 2018 case between UnitedHealth Group and Envision Healthcare.

Maintaining up-to-date provider directories is essential, as CMS can fine insurers with outdated directories. This is why UnitedHealthcare requires providers to notify them of changes and has a Professional Verification Outreach program to proactively request information from providers.

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The total cost of maintaining these directories is estimated at $2.1 billion annually, which is a significant burden on providers. A blockchain initiative began in 2018 to share the directory, aiming to make the process more efficient.

If you receive care from out-of-network doctors, you may be subject to balance billing, which can be particularly common in emergency or hospital care. This is often due to the patient not being notified that a provider is out of network.

Here are some key points to consider when it comes to provider networks: