Managed Care Explained for Better Health Outcomes

Managed care is a healthcare delivery system designed to provide cost-effective and high-quality care to patients. It's a network of healthcare providers, payers, and facilities that work together to coordinate care.

The goal of managed care is to ensure that patients receive the right care at the right time, which can lead to better health outcomes. This is achieved through a variety of strategies, including preventive care and early intervention.

In a managed care system, patients typically choose from a network of participating healthcare providers, such as primary care physicians, specialists, and hospitals. By choosing a primary care physician, patients can receive coordinated care and referrals to specialists when needed.

By coordinating care and managing costs, managed care can lead to better health outcomes and improved patient satisfaction.

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The History of Managed Care is a fascinating topic. Managed care has its roots in the 1970s, when Richard Nixon, advised by Dr. Paul M. Ellwood Jr., took steps to change American healthcare from a not-for-profit model to a for-profit model driven by the insurance industry.

In 1973, Congress passed the Health Maintenance Organization Act, which encouraged the rapid growth of Health Maintenance Organizations (HMOs), the first form of managed care. This marked a significant shift in the way healthcare was delivered and paid for.

Critics of managed care argued that it controlled costs by denying medically necessary services to patients, even in life-threatening situations. This backlash led many states to pass laws mandating managed-care standards.

Consumers faced rising health insurance premiums, but lower out-of-pocket costs likely encouraged them to use more healthcare. Between 1970 and 2005, the share of personal health expenditures paid directly out-of-pocket by U.S. consumers fell from about 40 percent to 15 percent.

Here are some key events in the history of managed care:

There are several types of managed care programs, ranging from more restrictive to less restrictive. Managed care plans are designed to help keep costs lower and quality high.

One of the most well-known types of managed care plans is the Health Maintenance Organization (HMO). An HMO is a coordinated delivery system that combines both the financing and the delivery of health care for enrollees. It requires members to see doctors within the plan's network and often has a Primary Care Provider (PCP) who coordinates all care.

A Preferred Provider Organization (PPO) offers more flexibility than an HMO, allowing members to see doctors outside the network and still be covered, but at a higher cost. PPOs also often don't have copayments but instead have deductibles and coinsurance features.

A Point of Service (POS) plan is a hybrid of HMOs and PPOs, offering more flexibility than an HMO but with higher costs for out-of-network care. POS plans often require members to see a PCP for referrals and have progressively higher patient financial participation as the patient moves away from the managed features of the plan.

Here are the basic types of managed care organizations or plans:

There are several types of managed care plans, ranging from more restrictive to less restrictive. The most common types are HMOs, PPOs, EPOs, and POS plans.

HMOs, or Health Maintenance Organizations, require you to see network providers, usually for a lower monthly premium. This means you'll need to see a Primary Care Provider (PCP) before going elsewhere, and most preventive care is covered at 100%.

PPOs, or Preferred Provider Organizations, give you the option to see any doctor you like, in- or out-of-network. You may pay less in-network, though, and there may be no requirements to get referrals from a PCP.

EPOs, or Exclusive Provider Organizations, combine features of HMOs and PPOs. Like a PPO, you may not be required to see a PCP or get a referral, but like an HMO, you are often required to see in-network doctors to be covered.

POS plans are a hybrid of HMOs and PPOs. You get the flexibility to see in- or out-of-network doctors like a PPO, but your share of the costs will be higher. This means you'll need to choose which system to use until the service is being used.

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Here are the basic types of managed care organizations or plans:

Private Fee-For-Service (PFFS) is a traditional kind of health care policy where insurance companies pay medical staff fees for each service provided to an insured patient.

PFFS plans offer a wide choice of doctors and hospitals, allowing patients to select the healthcare providers they prefer.

There are two main categories of fee-for-service coverage: Basic and Major Medical Protection.

Basic protection 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.

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Managed care organizations come in different forms, each with its own business model. Some organizations are made up of physicians, while others are a combination of physicians, hospitals, and other providers.

There are several types of organizations that provide managed care, including group practices without walls, independent practice associations, management services organizations, and physician practice management companies (PPMs).

Here are some examples of organizations that provide managed care:

The Illinois Department of Healthcare and Family Services operates three distinct care coordination programs: HealthChoice Illinois (HCI), YouthCare, and the Medicare Medicaid Alignment Initiative (MMAI).

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

The physicians in an IPA are usually 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.

IPAs usually have a governing board to determine the best forms of practices, but the contract with 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.

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

Illinois has three distinct care coordination programs within its Medicaid Managed Care program: HealthChoice Illinois (HCI), YouthCare, and the Medicare Medicaid Alignment Initiative (MMAI).

HealthChoice Illinois (HCI) serves a diverse population, including families and children, adults eligible for Medicaid under the Affordable Care Act, seniors and adults with disabilities who are not eligible for Medicare, and dual Medicare-Medicaid eligible adults receiving certain Long Term Services and Supports.

In FY 2022, HCI had contracts with five Managed Care plans, including Aetna Better Health of Illinois, Blue Cross Community Health Plan, CountyCare Health Plan, Meridian Health Plan, and Molina Healthcare.

YouthCare is a specialized HCI health plan that provides services to DCFS Youth in Care as well as DCFS Former Youth in Care. This program focuses on improving access to care through active coordination and a robust provider network.

The MMAI is a three-way partnership between HFS, the federal Centers for Medicare and Medicaid Services (CMS), and health plans. It reformed the way care is delivered to customers who are eligible for both Medicare and Medicaid services (dually eligible) by providing coordinated care.

Here are some of the Managed Care plans operating in Illinois: