Hassle-Free Health Coverage: Managed Care
Managed care plans provide comprehensive health services to their members and offer financial incentives for patients to use providers under contract with the plan. That's how managed care plans keep their costs low. (In recent years, though, even this tactic has had a diminishing effect.) Instead of paying for each service that you receive separately, the plans pay providers in advance. That's why insurance professionals call these plans prepaid care.
HMOs have been in existence for many years. However, their popularity has increased dramatically since the passage of the Health Maintenance Organization Act by the federal government in the late 1970s.
If you join an HMO, you'll pay a monthly or quarterly premium. That premium will remain the same-whatever your medical history and whether or not you use the plan's services. The plan will also charge a co-payment for certain services. For example: $10 for an office visit or $5 for a prescription. This is one of the ways in which the plans adjust for people who use the services more heavily than others.
By joining an HMO, you may have only a few out-of-pocket expenses for medical care-as long as you use doctors or hospitals that participate, or are part of, the HMO. HMOs generally don't require you to pay deductibles or co-insurance.
HMOs deliver care directly to patients. Whether patients go to a medical facility to see a doctor or to
a specific doctor's office, the business relationship is with the HMO. To many people, the health care providers seem to be interchangable subcontractors.
This appearance isn't exactly accurate. If you belong to an HMO, you usually have to receive your medical care through the plan by selecting a primary care physician who coordinates your care. A primary care physician may be a family practice doctor, an internist, pediatrician, etc. He or she is responsible for referring you to specialists.
While most of these specialists will be participating providers in the HMO, there are circumstances in which patients enrolled in an HMO may be referred to providers outside the HMO network and still receive coverage. (However, this issue is a major controversy in HMOs. We'll consider the matter in greater detail in Chapter 5.)
Preferred provider organizations and point-ofservice plans are the other major types of managed care. These plans combine the features of fee-for-service plans and HMOs. These plans provide choice regarding physician, hospital, etc.; an HMO restricts choice to a network provider. PPOs and POSs generally offer more flexibility than HMOs; but their premiums tend to be somewhat higher.
With a PPO or a POS, unlike most HMOs, you will get some reimbursement if you receive a covered service from a provider who is not in the plan. Of course, choosing a provider outside the plan's network will cost you more than choosing a provider in the network. These plans will act like fee-forservice plans and charge you co-insurance when you go outside the network.
What's the difference between a PPO and a POS plan? A POS plan has primary care physicians who coordinate care; in most cases, PPO plans do not.
In many cases, a PPO is under contract to-or a subsidiary of-a commercial insurer. The overall plan benefits may include preventive health care, diagnostic services, physicians' services, inpatient and outpatient benefits, etc. These types of services and benefits are provided under the basic medical plan and/or the PPO option.
