Starting more than 30 years ago and as a way to try to limit the rising cost of health insurance, the concept of “managed care” was born. Since then, it has engulfed the health insurance marketplace. It has become the main model by which health care is delivered to those needing health insurance. It differs from traditional health insurance in a variety of ways. One of the ways is that in traditional health insurance, services are rendered by a provider of the patient’s choice, the provider then submits a bill to the insurance company, and the provider gets paid by the insurance company subject the terms and limitations of the insurance policy.
The days are pretty much gone of traditional health insurance. Now, since managed care as a system of delivering and paying for health care has become dominant, the process is more complex. Choosing the right variety of managed care for you or your family, understanding how it works, and using it can be very complex. Helping you to do so is the purpose of this article.
WHAT IS MANAGED CARE AND HOW IS IT DIFFERENT FROM TRADITIONAL HEALTH INSURANCE?
In general, managed care involves combining the payment for health care and the delivery of it into a single “unit”. By that we mean that there exists an agreement between the managed care company and an approved health care provider. An approved health care provider is one who has met the licensure and quality requirements of the managed care company, and who has agreed to accept its payment rates. That agreement specifies the range of services that will be given to the customer and under what circumstances. These may include, for example, a yearly physical, blood tests, and emergency visits.
There is a separate agreement between the customer and the managed care company. The customer of a managed care company is usually called a “member”. That agreement specifies the bundle of services to which the customer is entitled after joining the managed care program, how to access the services, and how much the services will cost. The cost is stated in terms of the bundle of services that is purchased from the managed care company. There are usually different bundles for purchase from the managed care company depending upon whether more or fewer services are available for which the cost differs. The cost also differs depending upon whether an individual or a family joins. The cost is usually stated in terms of a monthly amount, much like traditional health insurance.
WHO RENDERS HEALH CARE SERVICES UNDER A MANAGED CARE PLAN?
Similar to traditional health insurance, managed care companies require that health care services be rendered by licensed providers. This condition will be stated in both the contract between the managed care company and its customer and in the contract between the managed care company and the provider. If the health care provider is an employee of the managed care company, the company will make sure that licensure is in order.
The managed care company will usually try to recruit providers in a variety of specialties as well as general practitioners. This is because the company wants to attract as many customers as possible. Managed care companies also try to recruit practitioners who may not usually be considered to be health care providers. An example would be a massage therapist, as long as he or she was licensed.
Using this information, hopefully it is more clear to you the differences and similarities between managed care and traditional health insurance.