Managed Care Overview

Overview

What is Managed Care?

Managed care is a complex system that involves the active coordination of, and the arrangement for, the provision of health services and coverage of health benefits.
The most common types of Managed Care Organizations (MCOs) include Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs) and Exclusive Provider Organizations (EPOs.)
Managed care usually involves three key components: oversight of the medical care given; contractual relationships and organization of the providers giving care; and the covered benefits tied to managed care rules.

In contrast, what is traditional health care?

Traditional health care is most identified with freedom of choice for patients and physicians. Patients can choose whatever physician they want to see, physicians can choose to order whatever services they feel are necessary.
Health Plans are mostly passive third parties, paying for all the services a physician orders, at the provider’s usual charges.
A Health Plan’s costs and premiums are based on prior experience and covered benefits of the population insured. There is no way to fix medical costs or know exactly what they’ll be in the future.
After medical services are rendered by providers, the health plan is billed, and patients must pay the difference between provider’s charges and what their health plan pays.

How are managed care health plans typically selected and paid for?

Large Employer Groups	Small Groups & Individuals	Medicare
Plan Selection Employer get quotes from various plans (Benefit consultants or coalitions may arrange quotes and negotiate selections ) Employer Selects Multiple Plans Employees select a plan from Employer list	Plan Selection Owner or Individual get quotes from various plans (Agent may arrange quotes) Owner or Individual selects a plan for themselves or their business	Plan Selection Government contracts with Plans Contracting Plans market to Medicare Consumers Interested Medicare consumers select from list of available Plans
Payments Employer pays each contracted plan premiums for covered employees Employer withholds contribution from employee paychecks Members pay copayments and other out-of-pocket expenses when they see providers	Payments Individual/Employer pays plan premiums Small Groups withhold contribution from employee paychecks Members pay copayments and other out-of-pocket expenses when they see providers	Payments Government pays each contracted plan premiums for covered person Medicare members pay plan any additional required premium Members pay copayments and other out-of-pocket expenses when they see providers

What is Defined Care?

Defined Care is the model that describes the health care system with employer sponsored Defined Contribution health plans.
Defined Contribution health plans involve employers and other traditional purchasers of care providing an allowance, that empowers consumers to purchase and select from a wide menu of benefit options that are arranged by the employer or a purchasing administrator.
Under Defined Care, the consumer is more empowered, informed and enabled, and consumer, provider, plan and employer roles and requirements change accordingly.

How can I find out more about Defined Care?

Visit MCOL's Defined Care web site at www.definedcare.com, designed to keep you up-to-date on what's happening with Defined Care. Register for e-newsletters, review Defined Care-related articles, download Defined Care charts, articles and survey results that you can use for your presentations and articles.

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