Managed Care is a way for health insurers to help control costs by managing the healthcare services people use. Today, nearly all health insurance plans include a managed care component to control costs. One such component is pre-authorization: Members may need to receive approval from the insurance company before being admitted to a hospital or having a major procedure.
Over the years, managed care has given birth to several types of health plans, all in an effort to balance quality care with lower costs. Here are a few of the prevalent ones you’ll encounter:
Preferred Provider Organizations (PPO) plans are similar to Fee For Service, with one wrinkle: They use a network of contracted medical “preferred providers” (doctors, hospitals, etc.). When members see doctors in the PPO network, they present a card and don’t have to fill out and submit claim forms. PPO members can visit any provider they choose without a referral—even doctors, specialists and hospitals outside the network. However, they will pay more for services outside the network than they will if they use in-network providers.
Point of Service (POS) plans revolve around a “primary care physician” who makes referrals to specialists as needed. Members who see providers in the POS plan network generally pay a small fraction of the service fee. Members can see providers outside the plan network only if they receive a referral from their primary care physician, plus they’ll generally pay a much larger percentage of the cost for out-of-network provider services.
Health Maintenance Organizations (HMO) plans are generally less expensive (lower premiums, copayments and deductibles), and member costs are more predictable, than with other types of plans. But they also offer the least amount of choice within their network of doctors, hospitals and other providers. And HMOs offer no coverage to members who see providers outside the network. (Exceptions may be made in emergencies or when necessary for other medical reasons.) Additionally, the smaller network can mean that members may have to wait longer for a doctor’s appointment.