Managed Care

Managed care is a way to deliver healthcare services based on the goals of controlling costs and utilization of healthcare services, while simultaneously attempting to measure quality of the care provided. The idea of managed care was developed as an attempt to reduce rising costs experienced with previous indemnity insurance plans.

The first health insurance companies supplied monetary reimbursement to hospitals and physicians for patient care on a fee-for-service basis, which meant payment for whatever services or procedures were provided to the patient.

By the middle of the 20th century, problems evolved with this framework. Patients were consuming more care because they did not have to pay much, if anything for it, and some physicians were providing services beyond what was medically necessary for a variety of reasons—including to decrease their chances of being sued by ordering many tests, and also to receive more income. These two problems created increased costs and less efficient patient care. Therefore, managed care developed in an attempt to solve these problems.

The initial Managed Care Organizations (MCOs) of the early 20th century were Health Maintenance Organizations (HMOs), which involved physicians contracting with employers to deliver medical care for employees. The physicians were prepaid a flat fee for each employee per month, and provided care whenever it was needed. This idea developed throughout the century, and some HMOs even built their own hospitals to care for patients.

MCOs today are structured so that patients have a limited number of healthcare providers whose services will be reimbursed by the MCO. The MCO and the providers negotiate to determine how much money will be paid for each procedure or service. Managed care plans are organized into four different structural formats, depending on the relationship of the physicians to the insurance company. In one group, the physicians work directly for the insurance company. In another format, the insurance company contracts with a large physician group to provide medical services.

These first two formats usually involve a much stricter contract than the last two, and limit the hospitals to which each physician may admit patients. The third and fourth organizational structures are less concrete and largely exist as networks between insurers and physicians. The third structure involves a large group of physicians that acts as its own insurer, collecting payment from patients and in turn compensating the member physicians.

The fourth and final organizational format for MCOs involves large insurers contracting with individual physicians or small physician groups. This format differs from the first two in that the physicians are allowed to contract with more than one insurer, and they have more freedom in how they run their private practice. Healthcare is continuously evolving, and the way care is provided to patients will forever be changing. Managed care has been a reality in the late 20th and early 21st centuries, but its future is unknown because of the political and economic issues that are always emerging.

Manic-depressive illness is a chronic illness that must be managed in the long term with careful treatment.