What is now called
"managed care" began in the 1940s with Health Maintenance
Organizations (HMOs). Families getting medical care at HMOs
were urged to get yearly checkups, and to seek preventive
care and early treatment in case of illness. This proved to
be cost-effective.
As health care costs rose, employers, for their employees,
began to sign contracts with companies offering to "manage"
health care. The managed care company organizes doctors into
cost-conscious groups. Since the 1980s, more and more
employee benefit programs have contracted with managed care
companies. There are now hundreds of managed care companies.
Their rules differ. Contracts change from year to year.
Consumers* may be offered several health insurance plans, at
different prices. Managed care companies often use doctors
and providers willing to lower their fees and work within
"practice guidelines." In general, the greater the choice of
providers and services, the more the consumer must pay.
*Individuals who receive mental health services use various
terms to describe themselves, such as consumers, survivors,
patients, clients or recipients. While respecting individual
preference, this document uses the term "consumer."
There are two major types of provider groups, or networks:
A Health Maintenance Organization (HMO) is a prepaid
health plan. For a fixed fee per year, an HMO provides
enrollees a range of medical services, both inpatient and
outpatient. Doctors, on salary or contract, may work in a
central facility or in a number of different places.
Generally, you must use the providers who work for the HMO.
A Preferred Provider Organization (PPO) is a group of
independent providers in private offices offering services
at a discount to the managed care company. The plan
distributes a list of participating doctors. In both PPO and
HMO plans with a "point-of-service" option, you may pay more
if you use a doctor outside this group.
What are the Benefits and
Drawbacks of Managed Care?
Managed care controls
medical costs mostly by limiting hospitalization, applying
"standards of care" for most conditions, and contracting
with exclusive providers. Managed care companies seek to
provide less expensive, less restrictive care.
Possible Benefits:
- Improved facilities.
Consumers of public health services may have access to
more attractive facilities and better trained medical
providers, located closer to home.
- Expanded choices. There
may be additional alternative service options in the
community. This includes treatment services (day
treatment, residential services, intensive outpatient
care, home therapy, telephone counseling) and support
services (self-help centers, psycho-social programs).
- Money saved can be used
to expand outpatient benefits, reduce member costs, or
help make health insurance affordable to more people.
Possible Drawbacks:
- If hospitalization is
denied without offering alternatives for intensive care,
a person's symptoms may get worse.
- People with long-term
illness may need more than short-term acute care
preferred by managed care.
- Continuity of care may
be difficult when people get short-term treatments at
different locations. Protecting confidentiality also
might be troublesome.
- Companies managing the
health care may change, potentially disrupting services.
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