With health-care tides shifting and a renewed focus on managed care, Americans have a choice when it comes to choosing a health insurance plan. The following is a review of managed-care basics.
Managed care is a general term describing methods that aim to reduce the cost of providing health benefits while improving quality of care. Although the nature of different managed-care delivery systems varies, the goals of managed-care organizations (MCOs) are largely the same. Some of the techniques designed to reduce health-care expenses include: incentives for patients and doctors to select less costly means of care; more cost sharing; controls on hospital admissions and lengths of stay; assessment of medical services and their necessity; ability to choose health-care providers, and more.
Because of the Affordable Care Act, almost all Americans have health insurance and are enrolled in some type of managed-care plan. This plan largely determines how they access and receive health care and how much they must pay for receiving care. Most insurance plans cover basic preventative health care, general checkups, immunizations (for children and adults), prescription medications, hospital treatment, and prenatal/newborn care. Many plans also provide coverage for mental-health treatment and substance-abuse services.
How Managed-Care Plans Differ
Health insurance companies offer a number of managed-care plans for individuals and families to choose from. The basic ways in which they differ are:
- The need to have a primary-care physician
- The need for a referral in order to see a specialist or access other services
- The need for health-care services to be preauthorized
- Will the plan pay for care obtained outside of the provider network?
- Amount of cost sharing recipient is required to pay
- The need to file insurance claims
Health-Insurance Plans and Acronyms Explained
Most health-insurance plans operate on the basis of a “network” of contracted health-care providers from whom patients may be required to receive all or part of their health services. Included in a network are doctors, labs, X-ray services, hospitals, clinics, pharmacies, medical equipment vendors, and other health-care providers. Some plans allow patients to receive out-of-network health care but at a higher cost-sharing fee.
- HMO is an acronym for health maintenance organization. This plan features low monthly premiums and low cost sharing, but requires receiving health care from a network and choosing a primary-care physician who is responsible for managing and coordinating health care. You need a referral to see a specialist or receive a diagnostic service (i.e., X-ray or lab test), and if you opt to see a physician outside of the plan’s network, you will have to pay out-of-pocket.
- PPO is an acronym for preferred provider organization, referring to the network of providers the plan prefers that you use; however coverage will still be provided for out-of-network care. You do not have to choose a primary-care physician, nor do you need a referral to access other providers in the network. The lack of restrictions is compensated for, however, in higher monthly premiums and cost-sharing.
- POS is an acronym for point of service plan, which combines elements of HMO and PPO. Namely, you are required to choose a primary-care doctor, but you can choose to seek out-of-network care (for a fee) without a referral from your doctor.
- Finally, EPO is an acronym for exclusive provider organization, which means you must choose exclusively from a list of approved providers, or you will not be covered. EPOs are similar to PPOs but do now allow for out-of-network care.
Which Managed Care Plan Is Best?