What is Managed Care?

by Lourdes A. Rivera, Carolyn V. Brown, Lisa Handwerker, and Paulita Ortiz

Traditionally, health care consumers with health insurance (either private, Medicaid, or Medicare) have had the freedom to choose any physician, as long as the physician accepted their type of health insurance. However, this is changing rapidly.

More and more patients are being asked to choose a "managed care" health plan in order to receive health are services. The number of Americans enrolled in managed care has increased dramatically over the years, from 6 million in 1976 to over 54 million in 1994. 1 According to a national survey conducted by Foster Higgins released in March, overall enrollment in managed care plans reached 77 percent of active employees.2 Low income families, children, and pregnant women who receive health care coverage through the federal and state-funded Medicaid program increasingly are required to enroll in a managed care plan, from 2.7 million Medicaid recipients in 1991 to 11.6 million as of June 1995.3 Elderly patients on Medicare, while not required to enroll in managed care yet, also are turning to health plans to receive their health care services.
 
For many people, managed care will be a whole new and unfamiliar way to access health care. Thus, it is extremely important for health care consumers to leam about what managed care is, what questions you (or your employer on your behalf) should ask before you make a choice of which plan to join, and what you can do to advocate for yourself when you face a problem. Over the next several issues of the Network News, we will be providing you with information to help you answer some of these important questions. This first article addresses the question: What is Managed Care? Future articles will include information on: How to Choose a Health Plan, How to Choose Your Primary Care Physician, What is Primary Care Anyway? and What Do I Do When I Have A Problem With My Health Plan?

What is Managed Care?
The term "managed care" can mean many different things to different people. However, some of the more common elements shared by managed care organizations (MCOs) are:
•    that the patient must obtain health services only from the providers included in the health plan network or else be required to pay more or all of the costs;
•     that the patient must choose or be assigned to a primary care physician (PCP) who is responsible for providing all primary care services and making all referrals to specialists; and
•    that the health provider receives a capitated (flat, per-month, per-patient) amount of money, no matter how many services a patient uses or needs;
•    that the health provider receives a negotiated, discounted rate for health services or procedures.
Aside from these common elements that most MCOs share, there are many different types of managed care organizations. For example, a staff model Health Maintenance Organization (HMO) hires and pays all of its providers a salary. Patients are expected to choose or be assigned to a primary care doctor who is responsible for coordinating all of the patient's health care needs. Kaiser is an example of a staff model HMO. A preferred provider organization (PPO) is another example of managed care. In a PPO, providers and facilities apply to be part of the "preferred" network. The PPO checks their credentials and places them on its provider lists. The health plan pays the doctor or facility a lower, negotiated fee in return for being a preferred provider. Patients using these providers will have to pay less out of  their own pockets. Blue Cross/Blue Shield has used this type of model. Other types of health plans are described in the Dictionary below. You will note that there are similarities among the entities that sometimes are difficult to differentiate.

No matter what the health plan in which you are enrolled is called, it will change the way you get health care. You only will be able to use the doctors, hospitals and other services that are in the health plan's provider network. If you "go out-of-network" to get care, you may have to pay more. Patients should be provided with a list of participating lectors and health care facilities. In me types of managed be provided with a list of participating doctors and health care facilities. In some types of managed care, such as care, such as HMOs, you cannot see a specialist or be admitted to a hospital without the referral or approval of your primary care physician or the health plan. This means, for example, that you may not be able to go see your gynecologist without a referral from your primary care provider (e.g., family health practitioner, internist). (Some states are passing laws to require that patients be allowed to see gynecologists and obstetricians without having to get a referral first). Of course, in the case of an emergency (e.g., chest pain, heavy bleeding, stroke), you should go to the nearest emergency room and then contact your doctor or health plan as soon as possible. From a consumer's perspective, it is important to understand that the health plan and the health plan's doctors and other providers will be receiving a limited or reduced amount of fees to provide the health care services that you need. If you use no or few services, your health plan and doctor gets to keep the fee. If you use many services, your health plan and doctor can lose money. On one hand, these arrangements have helped to provide consumers with access to coordinated health care services, have reduced the incidences of unnecessary care, and have contained and reduced health care costs. On the other hand, as a consumer, you may need to be very vocal and insistent about the health care services that you think you need, because these arrangements also have served to pressure health plans and doctors to provide less care, even when you need it. Also, in the case of for-profit MCOs, there is the additional financial pressure to make a profit for the plan's stockholders and investors which also can impact the amount and appropriateness of care that you receive.

Keep in mind that not all health plans function in the same way. As a consumer, you should assess what your needs are, including any special needs if you or anyone in your family is disabled or chronically ill, and then you will have to see whether the health plan that you are considering is a good match. Furthermore, there are basic elements that the better health plans share and characteristics that a good health plan should not have:

A Health Plan Should
•    give you an up-to-date list of the doctors and hospitals near you that you can use.
•     have enough doctors so that you get the health care you need on a timely basis.
•     provide preventive care check-ups and immunizations.  
•    make sure you get all the care you need without long waits for appointments and services.
•    make sure the doctors are accessible by being easy to reach by phone and by public transportation.  
•    limit the costs you pay out of your own pocket ("co-pays").
•    have an easy process to deal with your concerns, questions, and complaints (grievances).
•    provide you with information in writing.  
•    have staff that are respectful and helpful and speak your language.
•    have a plan of care for you when you travel away from your home (out of- area care).

A Health Plan Should NOT
•    put heavy pressure on you to choose them (e.g., they should not give you a hard sell).
•    include inadequate numbers of doctors and specialists to serve you and the other patients in the health plan.
•     make you wait a long time before getting the care you need (e.g., longer than 24 hours for urgent care and two weeks for routine care).
•    make money by not giving you care when you need it.
•    give you the "run-around" to avoid serving or working with you.
In our next issue of the Network News, we will provide you with more specific guidance on what to look for in a health plan.

This article was adopted with permission from National Health Law Program, Choosing a Health Plan (Los Angeles, CA: 1996).

Lourdes Riuera, carofyn V. Brown, Lisa Handwerker, and Paulita Ortiz are members of the Network's Board of Directors

1 Group Health Association of America (GHM), National Directory of HMOs (Washington, D.C.: June 1995), cited in, national Association of Child Advocates, Medicaid Managed Care: An Advocate's Guide for Protecting Children at 2-1 (Washington, D.C.: 1996).

2 Bureau of National Affairs, Total Managed Enrollment Increases, But HMO Growth Remains Flat, Survey Shows, 3 Managed Care Reporter at 266 (March 19, 1997).

3 The Kaiser Commission on the Future of Medicaid, The Medicaid Program at a Glance (November 1996)