Working Your Way Through Managed Care

This is a continuation of our series on health insurance and in particular, managed care. Managed care can be intricate, so it will be explained in several articles.

The term, “managed care” is common and to many, has a stigma of lower quality health care. There may have been a time when that had some truth, but managed care has become so integrated into the health care delivery system, that the stigma is all but gone.

For those readers that are employed by a third-party, you probably have a Benefits or Human Resources Department to go to for help. But if you are self-employed or retired from your prior job (some people of retirement age decide not to quit working or to enroll in Medicare when eligible, but to consult or start businesses) and are therefore on their “insurance own.” Figuring out the insurance options, so many of which are varieties of managed care, for yourself is baffling. There are also varieties of managed care arrangements for Seniors who choose Medicare, so there is really no way to avoid the need to learn about it.

Some Managed Care History

Managed care started more than 30 years ago as a means of controlling then-rising health insurance costs. The costs are still rising, so many believe that managing care delivery is even more important. Many varieties of managed care exist.

In general, managed care is not insurance as the term “insurance” is usually used. Instead, think of it as a delivery system. It involves the combination of health care financing and the delivery of health care services. Stated otherwise, it is a mechanism where a bundle of health care services is delivered to a member of the managed care entity. Note that we did not use the word “insured”; in the world of managed care, the people obtaining services through the system are called “members”. Therefore, people who enter managed care arrangements need to get used to different language from the old days of straight health insurance.

A major way in which managed care is different from traditional health insurance is that there is no direct relationship between the medical provider and the entity that pays for the services (an insurance company). Traditionally, like in a fee for service arrangement, the medical provider renders a medical service, issues a bill and, within the limits of the insurance policy, the insurer pays all or part of it directly to the provider.

There, the patient can obtain services from whomever he or she wanted who would accept the amount of insurance reimbursement. In managed care, the plan, such as a Health Maintenance Organization (HMO) negotiates terms and reimbursement rates with a network of care providers.

The patient (“member”) has access to the network of providers because of his or her membership in the HMO. In some cases, the patient is allowed to go “out of network”, but reimbursements and co-payments may be different from those applicable to an in-network provider.

“Out of network” means that the provider rendering care is not a participating provider in the network. If there is not a provider in the network who is willing or able to furnish the needed service, such as a speciality provider, the additional co-payment may be waived.