Managed Care

Managed care refers to a vast array of organizational and financial arrangements intended to control health care costs and improve quality of care. For most of its history, health care in the United States has been a fee-for-service system. Physicians were paid for the services they provided families and had almost complete control over decisions about treatment. Some believe that paying for medical care on the basis of quantity alone gives providers an incentive to provide more services than medically necessary. Managed health care directly challenged the system of fee-for-service in an effort to rearrange these incentives.

Health maintenance organizations (HMOs) is one example that dominated the landscape in the 1990s, the traditional form being large organizations that were contracted to provide health care services to ...