What is Managed Care?

Managed Care is a system for organizing the delivery of health services so that:

 The cost of care is reduced.

 The quality of care is maintained or improved.

Managed Care programs try to control costs by:

 Encouraging members to obtain preventative care, such as annual physical examinations,

mammograms and other wellness services.
 Working with you and your physician to make sure that the care you receive is cost-effective and
medically necessary.
 Negotiating special rates and treatment guidelines with physicians and hospitals, called "preferred
providers."
 Providing financial advantages for patients to use these preferred providers.

Most health plans now include at least some elements of managed care. But as you'll see, there is a wide
variety of approaches to managed care.

What are the Different Types of Managed Care Plans?

Managed care plans usually fall into one of these general catagories:
 
Health Maintenance Organization (HMO): An HMO is a managed care plan that offers a full range of
services for a fixed prepaid fee, rather than charging each patient for each service provided. You normally
pay only a small copayment for your care. With some plans and for some services, you may also have to
satisfy a deductible. Usually, you don't have to file claims.
With an HMO, you must obtain care only from that HMO's participating doctors.Each HMO recruits a
network of participating physicians and other health care providers who agree to follow its guidelines and
accept its reimbursement. When you and your family join the HMO, you choose a primary care physician
(PCP) from the doctors in that network. This PCP is responsible for managing all your medical care and
provides a referral to a network specialist whenever you need specialty care.

HMO plans typically fall into one of these two categories:

Staff Model: A staff model HMO has salaried physicians who provide services only to plan members. They
offer care at a hospital, a clinic or health center in the community.

Independent Practice Association (IPA): An IPA maintains contracts with a number of physicians
and/or physician group practices, who see patients in their own offices.

When you consider joining a managed care plan, you should:

 Look carefully at in-network and out-of-network coverage provisions.

 Review the duties of a primary care physician in detail.

 
Once you understand these features, you'll know what your obligations will be under whatever plan you're
considering. This will help you make an informed decision before you incur any financial obligations or
choose your doctor.

POINT OF SERVICE (POS) PLAN: POS plans function much like IPA's. You select a primary care
physician who coordinates all care within the participating provider network, including specialist referrals.

With a POS plan, though, you can use physicians and hospitals outside the network or network specialists
without a referral, if you're willing to pay more and file claims for reimbursement. For example, you might pay
a $10 copayment for an office visit to a network physician, when you'd pay $10 plus 25 percent of the
doctor's charge at a non-network physician.

PREFERRED PROVIDER ORGANIZATION (PPO): A PPO plan functions like a POS plan, but eliminates
the primary care physician. As with the POS plan, you can use a health care provider outside of the
"preferred provider" network for an additional cost. However, you can usually see any participating provider -
whether primary physician or specialist - without a referral, at no additional cost.

The Basics of Choosing A Managed Care Plan

Many factors need to be considered when choosing your health plan. Some you control, and some you
don't. For example, if you're employed, your employer generally determines what, if any, choices you have.

In this section, we discuss many of the criteria that people use to decide on their health coverage. You
should decide which of these factors are most important to you and your family, and make your choice
accordingly.

 Recommendations
 Quality of Care
 Financial Considerations
 Helping You Understand Your Health Care Options

The type of health plan you join can

affect what is covered, what you pay,
and the doctors and hospitals you can
use. The big difference in types of
health plans is whether they have a
network: the group of doctors, hospitals,
and other health care providers who
serve people in a specific health plan.

NETWORK What it means to you.

If you are in a health plan with a network, to pay the

 least and get the most benefits and coverage, you have
to use the doctors, hospitals, and other providers in the
network. Networks have providers who have met
standards set by the health plans.

HMO Health Maintenance Organization.

If you use the network, there are advantages in cost and
coverage.
As long as you use the doctors, hospitals, and other
providers in the HMO network, the HMO pays for all
covered services. You may have to pay a small amount
when you get care, for example, $10 per office visit.

Most HMOs ask you to choose a doctor or clinic to be

your primary care provider, or PCP. Your PCP takes
care of most of your medical needs.

In many HMOs, in order to see a specialist or other

providers in the network, you must talk to your PCP to
get approval for a "referral." Women have direct access
to an obstetrician/gynecologist for their reproductive or
gynecological care.

Points to consider:

 More health care services may be covered that

are not usually covered by traditional insurance,
such as preventive care.
 Premiums and out of pocket cost are usually
less.
 If you choose to see a doctor or other provider
who is not in the network, you will have to pay
the full cost.
 You will have very little paperwork.
 Premiums and out of pocket cost may be less.
 HMOs participate in quality improvement
projects with physicians and hospitals.

 Providers' credentials are verified.

POS Point-of-Service option with HMOs.

You don't have to use the HMO network, but there
are advantages if you do.
In HMOs with a POS option, you can use the plan as an
HMO or as a fee-for-service plan.

Points to consider:
If you use only a Provider who IS in the HMO network.

 You will pay less when you get care.

 You get full HMO benefits/coverage.
  You will have very little paperwork.

If you use a Provider who IS NOT in the HMO network:

 You will pay more when you get care.

 Fewer health services may be covered and
some services may not be covered at all.
 You generally have to file a claim.

 Providers' credentials are verified.

PPO Preferred Provider Organizations.

You don't have to use the PPO network, but there
are advantages if you do.
PPOs are similar to traditional fee-for-service health
insurance, except they have network. PPOs give you
the choice of using any doctor or other provider you
want, or using one who is part of their network.

Points to consider:
If you use a Provider who IS in the PPO network:

 You will pay less when you get care.

 More health care services may be covered.
 You may have less paperwork.

If you use a Provider who IS NOT in the PPO network:

 You will pay more when you get care.

 Fewer health care services may be covered.

 You generally have to file a claim.

NO NETWORK The traditional type of insurance.

  Fee-for-Service

This type lets you use any doctor or hospital, but

usually cost you more.

These plans are called "fee-for-service" because

doctors and other providers receive a fee for each
service such as an office visit, test, procedure, or other
health care service. There is usually a "deductible,"
which is the dollar amount you must pay each year
before the insurance company begins to pay. And when
your insurance does pay, you usually have to pay a
portion of the cost yourself (for example, 20 percent of
the charge.)
 Points to consider:

 You will have no limitations on choice of

providers.
 You may pay more when you get health care
(office visits, hospital stays, etc.)
 There is more paperwork, such as filing claim
forms to get payment for services covered by
the insurance, and keeping track of payments
toward the deductible.
 Preventive services may not be covered.
 Premiums and out-of-pocket costs may be
more.

 Your insurer may or may not send reminders to

you or provide special resources, such as
special programs for people with a chronic
illness.

What Type of Health Plan Is Best For Me?

Most plans fall into five basic categories: traditional health insurance, Health Maintenance
Organizations (HMOs), Preferred ProviderOrganizations (PPOs), Point-of-Service plans (POSs),
and Exclusive Provider Organizations (EPOs). But there are also differences between plans of
the same basic type (for example, not all HMOs are the same), so be sure to read all materials
provided by your employer and the health plan carefully.

Traditional Insurance

Traditional health insurance is generally the most flexible type of health plan. It allows you to
choose any doctor you want to and see specialists without getting approval from a "primary care
physician" or "gatekeeper" first. However, depending on the plan, certain restrictions may apply.
For example, you may need to get the insurance company's approval before checking into a
hospital, unless it is an emergency.

With traditional health insurance, you will usually have to spend a certain amount on medical bills
each year before your insurance starts to pay. This is called a deductible. After that, you will have
to pay a percentage of each charge, called a co-payment. The insurance company will pay the
rest of the charge based on what it considers reasonable. Many insurance plans protect you from
large medical expenses by limiting your total expenses in any given year, called your out-of-
pocket expenses. There may also be a cap on total benefits--a maximum amount the insurance
company will pay in your lifetime.

Traditional health insurance is generally more expensive than other types of health plans and
may require you to do more paperwork to file claims.
Traditional insurance companies are regulated by the California Department of Insurance.

HMO (Health Maintenance Organization)

There are several types of HMOs. Most will only cover your expenses if you go to a health care
provider within their organization (unless it's an emergency or you're out-of-town). They may
require that you choose a primary care physician who will coordinate your care. And you will
probably have to get approval from that physician before seeing a specialist. You must get
approval from the HMO before entering a hospital or receiving some other kinds of non-
emergency care.

Most HMOs do not require that you meet a deductible each year and require only a small co-
payment (for example, $5 per visit or prescription). Most of the paperwork is handled by the
organization.

HMOs are regulated by the California Department of Managed Health Care.

PPO (Preferred Provider Organization)

PPOs are generally less flexible than traditional health insurance plans but more flexible than
HMOs. You can see any health care provider you want to (including a specialist), but your co-
payment will be higher if the physician you choose is not a "preferred provider", that is, a
physician that the health plan has a contract with.

PPOs will almost always require that you get their approval before entering a hospital. But they
are more likely to cover checkups and other preventive medical services than traditional health
insurance plans, and most preferred providers will file your claims for you.

POS (Point of Service)

A POS plan is similar to an HMO in that you can see physicians within a network and pay only a
small co-payment. But you can also see physicians that aren't in the network and pay a
percentage of the charge, after you've met your deductible, as you would with a PPO plan.

There may be restrictions on the services you can receive outside the network with a POS plan.
For example, prescription drugs, organ transplants, treatment for infertility, and mental health
services may not be included.

EPO (Exclusive Provider Organization)

An EPO is similar to an HMO, except that it is regulated by the California Department of

Insurance and generally pays physicians and other healthcare providers differently. EPOs will
only cover your expenses if you see a physician that is in the EPO's network, unless it is an
emergency.

If you're still not sure which type of plan to choose, you may want to use our checklist of health
plan features and services to compare your options...or ask for more information from the health
benefits manager at your workplace or a health plan representative. Your physician may also be
in a good position to help you compare plans, since he or she is familiar with your health and
medical history.
The Types of Health Insurance

Health insurance plans are usually described as either indemnity

(fee-for-service) or managed care. These types of plans differ in
important ways that are described below. With any health plan,
however, there is a basic premium, which is how much you or
your employer pay, usually monthly, to buy health insurance
coverage. In addition, there are often other payments you must
make, which will vary by plan. In considering any plan, you
should try to figure out its total cost to you and your family,
especially if someone in the family has a chronic or serious
health condition.

Indemnity and managed care plans differ in their basic approach.

Put broadly, the major differences concern choice of providers,
out-of-pocket costs for covered services, and how bills are paid.
Usually, indemnity plans offer more choice of doctors (including
specialists, such as cardiologists and surgeons), hospitals, and
other health care providers than managed care plans. Indemnity
plans pay their share of the costs of a service only after they
receive a bill.

Managed care plans have agreements with certain doctors,

hospitals, and health care providers to give a range of services
to plan members at reduced cost. In general, you will have less
paperwork and lower out-of-pocket costs if you select a
managed care type plan and a broader choice of health care
providers if you select an indemnity-type plan.

Over time, the distinctions between these kinds of plans have

begun to blur as health plans compete for your business. Some
indemnity plans offer managed care-type options, and some
managed care plans offer members the opportunity to use
providers who are "outside" the plan. This makes it even more
important for you to understand how your health plan works.

Besides indemnity plans, there are basically three types of

managed care plans: PPOs, HMOs, and POS plans.

Indemnity Plan

Also known as traditional or fee-for-service plans . allow you to

choose any doctor or hospital you want. In return, you pay an
annual deductible, then a percentage of your medical bill.
Although these plans offer the greatest freedom to select any
doctor, they are usually the most expensive option available. You
or they send the bill to the insurance company, which pays part
of it. Usually, you have a deductible. such as $200. to pay each
year before the insurer starts paying.

Once you meet the deductible, most indemnity plans pay a

percentage of what they consider the "Usual and Customary"
charge for covered services. The insurer generally pays 80
percent of the Usual and Customary costs and you pay the other
20 percent, which is known as coinsurance. If the provider
charges more than the Usual and Customary rates, you will have
to pay both the coinsurance and the difference.

The plan will pay for charges for medical tests and prescriptions
as well as from doctors and hospitals. It may not pay for some
preventive care, like checkups.

Managed Care

Preferred Provider Organization (PPO). A PPO combine

elements of indemnity and managed care plans. Each time you
need care, you choose among doctors who belong to the PPO
network or any non-network doctor. You pay less when you use
the network's "preferred providers." However, you can see any
doctor any time you wish, usually without getting an okay from
the plan first. If you choose not to use the plan's preferred
providers, you will probably have to pay more for care .

If you go to a doctor within the PPO network, you will pay a

copayment (a set amount you pay for certain services. say $10
for a doctor or $5 for a prescription). Your coinsurance will be
based on lower charges for PPO members.

If you choose to go outside the network, you will have to meet

the deductible and pay coinsurance based on higher charges. In
addition, you may have to pay the difference between what the
provider charges and what the plan will pay.

Health Maintenance Organization (HMO). HMOs require that

you pay a small, set copayment when you use the plan's HMO
doctors. You generally don't have to pay a deductible in an HMO.
You usually select a primary care physician who manages all of
your health care and serves as a gatekeeper for specialty care. If
you go to doctors who are not in the HMO, you pay the full cost
of the care (unless it's an emergency situation). Most HMOs are
relatively inexpensive, offer preventive care services, and have
special programs for disease management

There are many kinds of HMOs. If doctors are employees of the

health plan and you visit them at central medical offices or
clinics, it is a staff or group model HMO. Other HMOs contract
with physician groups or individual doctors who have private
offices. These are called individual practice associations (IPAs)
or networks.

HMOs will give you a list of doctors from which to choose a

primary care doctor. This doctor coordinates your care, which
means that generally you must contact him or her to be referred
to a specialist.

With some HMOs, you will pay nothing when you visit doctors.
With other HMOs there may be a copayment, like $5 or $10, for
various services.

Point-of-Service (POS) Plan. Many HMOs offer an indemnity-

type option known as a POS plan. POS plans or Open Access
HMOs add an out-of-network benefit to HMOs. Like HMOs, you
select a primary care physician who manages all of your care
and is responsible for referring you to plan specialists.

In a POS plan however, you have the option of going outside the
HMO network (although you¹ll pay more for care received
outside of the network).
 
 
Types of Insurance
This information was provided by The Hospital Association of Pennsylvania

There are two broad types of health insurance. Traditional insurance, or indemnity
insurance, pays for your health care as you use health care services. Managed care
insurance assumes a greater responsibility for the health care services you receive.
Rather than just paying for your care, managed care plans negotiate fees with
providers to help make your insurance more affordable. They also closely monitor
quality and utilization of services. Other types of insurance are funded by the
government or employers.

Traditional or indemnity insurance plans offer the consumer the widest choice of
doctors and hospitals. Generally, you pay for doctor visits and submit a claim form to
your insurance company to receive reimbursement. Many preventive and primary
services at the doctor's office are not covered by the plan. You must meet a
deductible, which means you spend a specified amount out-of-pocket before you can
receive payment for services. You usually are responsible for a co-payment, your
share of the bill, for certain services after you have met your deductible. Services are
paid on a fee-for-service basis, which means that preset fees are paid for services
defined by your insurance plan. Some participating providers accept as payment in
full what is paid by the insurer for services you receive. This is called assignment.
Others require you to pay the portion of the bill not covered. This amount is not
reimbursed by the insurer.

Managed Care Plans

Three common types of managed care insurance plans are health maintenance
organizations (HMOs), preferred provider organizations (PPOs) and point of service
(POS) plans. Because these plans typically cost less than traditional plans, many
employers and government programs are giving individuals financial incentives to
join a managed care program. In Pennsylvania, Medical Assistance recipients
especially are being encouraged to join an HMO.

Health maintenance organizations (HMOs) provide a comprehensive set of basic

health care services, emphasizing preventive care such as doctor visits,
immunizations and well-baby care. You obtain care from a specific group of doctors
and hospitals. Most HMOs require you to select a primary care physician who
becomes your first point of contact with the health care system. These primary care
physicians are often called "gatekeepers." If you need specialty services, you usually
have to be referred by your primary care physician. Often, you will pay a small co-
payment for services and office visits. You also will pay extra to see non-participating
physicians.

A preferred provider organization (PPO) contracts with a selected group of providers

to make their services available to PPO enrollees, usually at a discounted price. PPOs
do not require you to use preferred providers, but typically you will pay more to see
a non-preferred provider.

Point of service (POS) plans are a mix between HMOs and PPOs. Like an HMO, point
 of service plans require you to choose a primary care physician as your
"gatekeeper." But like a PPO, you have the option of seeing a non-participating
physician and paying a larger share of the cost. Like the HMO, point of service plans
emphasize both primary and preventive care.

Other Types of Insurance

Other types of insurance, such as car insurance and workers' compensation

insurance, also may pay for part of your health care if you have an accident. To help
ensure that your health insurer will pay for any services not covered by these other
types of insurance, you should inform your health insurer of any accidents as soon as
possible. If you are on Medicare, you may purchase supplemental insurance, called
Medigap insurance, to pay for services not covered by Medicare.

COBRA Benefits

If you are employed and receive health care insurance through your employer, you
can continue that coverage at your cost if you lose or change your job. Under COBRA
benefit rules, your employer must give you the option of keeping your health
insurance at the group insurance rate. The group rate is usually much lower than
what you would pay on your own. You may keep your insurance at this cost for 18
months. Then, you must purchase insurance on your own or enroll in another group
plan.

TYPES OF INSURANCE

HMOs, PPOs, and POS Plans

There are three basic types of managed care health insurance plans: (1) HMOs, (2) PPOs,
and (3) POS plans.

HMOs
A health maintenance organization (HMO) is a type of managed healthcare system. HMOs,
and their close cousins, preferred provider organizations (PPOs), share the goal of reducing
healthcare costs by focusing on preventative care and implementing utilization management
controls.

Unlike many traditional insurers, HMOs do not merely provide financing for medical care.
The HMO actually delivers the treatment as well. Doctors, hospitals, and insurers all
participate in the business arrangement known as an HMO.

HMOs provide medical treatment on a prepaid basis, which means that HMO members pay
a fixed monthly fee, regardless of how much medical care is needed in a given month. In
return for this fee, most HMOs provide a wide variety of medical services, from office visits
to hospitalization and surgery. With a few exceptions, HMO members must receive their
medical treatment from physicians and facilities within the HMO network. The size of this
network varies depending on the individual HMO.

When you join an HMO, you choose a primary care physician (PCP) who is your first
contact for all medical care needs. The primary care physician provides your general
medical care and must be consulted before you can see a specialist. Because of this control
system, HMO costs tend to increase less rapidly than other insurance plans.

Advantages of HMOs
Low out-of-pocket costs
With most types of insurance, you are responsible for paying a percentage of the bill every
time you receive medical care. Additionally, there may be a deductible that must be met
before insurance starts picking up the tab. In contrast, HMO members pay a fixed monthly
fee, regardless of how much medical care is needed in a given month. Instead of deductibles,
HMOs often have nominal co-payments.

Focus on wellness and preventative care

By reducing out-of-pocket costs and paperwork, HMOs encourage members to seek medical
treatment early, before health problems become severe. Additionally, many HMOs offer
health education classes and discounted health club memberships.

Typically no lifetime maximum payout

Unlike most health insurance plans, HMOs generally do not place a limit on your lifetime
benefits. The HMO will continue to cover your treatment as long as you are a member.

Disadvantages of HMOs
Tight controls can make it more difficult to get specialized care
As an HMO member, you must choose a primary care physician (PCP). Your PCP provides
your general medical care and must be consulted before you seek care from another
physician or specialist. This screening process helps to reduce costs both for the HMO and
for HMO members, but it can also lead to complications if your PCP doesn't provide the
referral you need.

Care from non-HMO providers generally not covered

Except for emergencies occurring outside the HMO's treatment area, HMO members are
required to obtain all treatment from HMO physicians. The HMO will not pay for non-
emergency care provided by a non-HMO physician. Additionally, there may be a strict
definition of what constitutes an emergency.

PPOs
Like an HMO, a preferred provider organization (PPO) is a managed healthcare system.
However, there are several important differences between HMOs and PPOs.

A PPO is actually a group of doctors and/or hospitals that provides medical service only to a
specific group or association. The PPO may be sponsored by a particular insurance
company, by one or more employers, or by some other type of organization. PPO physicians
provide medical services to the policyholders, employees, or members of the sponsor(s) at
discounted rates and may set up utilization control programs to help reduce the cost of
medical care. In return, the sponsor(s) attempts to increase patient volume by creating an
incentive for employees or policyholders to use the physicians and facilities within the PPO
network.

Rather than prepaying for medical care, PPO members pay for services as they are rendered.
The PPO sponsor (employer or insurance company) generally reimburses the member for
the cost of the treatment, less any co-payment percentage. In some cases, the physician may
submit the bill directly to the insurance company for payment. The insurer then pays the
covered amount directly to the healthcare provider, and the member pays his or her co-
payment amount. The price for each type of service is negotiated in advance by the
healthcare providers and the PPO sponsor(s).

Advantages of PPOs
Free choice of healthcare provider
PPO members are not required to seek care from PPO physicians. However, there is
generally strong financial incentive to do so. For example, members may receive 90%
reimbursement for care obtained from network physicians but only 60% for non-network
treatment. In order to avoid paying an additional 30% out of their own pockets, most PPO
members choose to receive their healthcare within the PPO network.

Out-of-pocket costs generally limited

Healthcare costs paid out of your own pocket (e.g., deductibles and co-payments) are
limited. Typically, out-of-pocket costs for network care are limited to $1,200 for individuals
and $2,100 for families. Out-of-pocket costs for non-network treatment are typically capped
at $2,000 for individuals and $3,500 for families.

Disadvantages of PPOs
Less coverage for treatment provided by non-PPO physicians
As mentioned previously, there is a strong financial incentive to use PPO network
physicians. For example, members may receive 90% reimbursement for care obtained from
network physicians but only 60% for treatment provided by non-network physicians. Thus,
if your longtime family doctor is outside of the PPO network, you may choose to continue
seeing her, but it will cost you more.

More paperwork and expenses than HMOs

As a PPO member, you may have to fill out paperwork in order to be reimbursed for your
medical treatment. Additionally, most PPOs have larger co-payment amounts than HMOs,
and you may be required to meet a deductible.

POS plans
A Point of Service (POS) plan is a type of managed healthcare system that combines
characteristics of the HMO and the PPO. Like an HMO, you pay no deductible and usually
only a minimal co-payment when you use a healthcare provider within your network. You
also must choose a primary care physician who is responsible for all referrals within the
POS network. If you choose to go outside the network for healthcare, POS coverage
functions more like a PPO. You will likely be subject to a deductible (around $300 for an
individual or $600 for a family), and your co-payment will be a substantial percentage of the
physician's charges (usually 30-40%).

Advantages of POS plans

Maximum freedom
POS coverage allows you to maximize your freedom of choice. Like a PPO, you can mix the
types of care you receive. For example, your child could continue to see his pediatrician who
is not in the network, while you receive the rest of your healthcare from network providers.
This freedom of choice encourages you to use network providers but does not require it, as
with HMO coverage.

Minimal co-payment
As with HMO coverage, you pay only a nominal amount for network care. Usually, your co-
payment is around $10 per treatment or office visit. Unlike HMO coverage, however, you
always retain the right to seek care outside the network at a lower level of coverage.

No deductible
When you choose to use network providers, there is generally no deductible. Thus, coverage
begins from the first dollar you spend as long as you stay within the POS network of
physicians.

No "gatekeeper" for non-network care

If you choose to go outside the POS network for treatment, you are free to see any doctor or
specialist you choose without first consulting your primary care physician (PCP). Of course,
you will pay substantially more out-of-pocket charges for non-network care.

Out-of-pocket costs limited

Healthcare costs paid out of your own pocket (i.e., deductibles and co-payments) are
typically limited. The average yearly limit for individuals is around $2,400. For families, the
average yearly limit is approximately $4,000.

Disadvantages of POS plans

Substantial co-payment for non-network care
As in a PPO, there is generally strong financial incentive to use POS network physicians.
For example, your co-payment may be only $10 for care obtained from network physicians,
but you could be responsible for up to 40% of the cost of treatment provided by non-
network doctors. Thus, if your longtime family doctor is outside of the POS network, you
may choose to continue seeing her, but it will cost you more.

Deductible for non-network care

In most cases, you must reach a specified deductible before coverage begins on out-of-
network care. On average, individual deductibles are around $300 per year, and the average
annual family deductible is about $600. This deductible amount is in addition to the co-
payment for out-of-network care.

Tight controls to get specialized care

As in an HMO, you must choose a primary care physician (PCP). Your PCP provides your
general medical care and must be consulted before you seek care from another doctor or
specialist within the network. This screening process helps to reduce costs both for the POS
and for POS members, but it can also lead to complications if your PCP doesn't provide the
referral you need.

What types of health insurance are available?

Health insurance plans generally fall into one of two categories: indemnity plans (also known
as reimbursement plans) and managed care plans such as health maintenance organizations
(HMOs), preferred provider organizations (PPOs), and point of service (POS) plans.

 An indemnity plan allows you to choose your own doctors and pays for your medical
expenses--totally, in part, or up to a specified amount per day for a specified number
of days.
 Managed care plans generally provide broader coverage, but they all involve an
arrangement between the insurer and a selected network of health-care providers
(doctors, hospitals, etc.). For example, an HMO will require that a primary care
physician in the network coordinate all of your care and refer you to specialists in the
network.

No matter which type of health insurance you buy, you'll need to make sure it offers the right
kinds of coverage

What is Managed Care?

In managed care, insurance companies contract with doctors and hospitals to provide
health care services. If you get your managed care health insurance through your job, as
many people do, your employer pays the managed care plan a set amount of money in
advance to pay for all your health care. You pay only a small amount called a copayment.
In most managed care plans, you choose doctors or hospitals from the plan's network.
Some managed care plans will let you see doctors outside the plan, but you may pay
more. You also usually must get the plan's okay before you can be admitted to the
hospital or see a specialist.

These changes in the health care system mean that you need to be active and learn about
your managed care plan to get the best care possible.

Types of Managed Care Plans

There are many kinds of managed care plans. You've probably heard of the most
common plans: health maintenance organizations (HMOs) and preferred provider
organizations (PPOs). As the health care system continues to change, so may the types of
managed care plans. The most important thing to know about your plan are the rules and
how they apply to you.

You can join a managed care plan through your employer's health benefits program or as
an individual by buying your own insurance policy.

Once you join a plan, you are called a "member" of that plan. Each plan has rules you
need to follow. In some plans, such as HMOs, you can usually only see doctors that are
part of their "network," or group. In other plans, such as PPOs, you may be able to see
doctors outside their network but you usually pay more.

If you want more detail about these plans, see articles in the Medicare section of this site.

Four Key Things to Know

1. The best managed care plans focus on keeping you well or keeping a chronic
condition under control. The plans encourage you to eat right, get lots of exercise,
and use your prevention benefits to find an illness early.
2. Managed care plans are businesses. When you get sick, the plans try to keep
health care costs low. For example, they might not pay for the latest or highest-
cost treatment if they believe a less costly treatment will work just as well.
3. You need to play an active role in your health care. This means you will need to
be a partner with your plan and doctor, working closely with them to get the best
health care.
4. You need to stand up for yourself. Be ready to appeal a plan's decision if it denies
or stops treatment you feel you need.

AARP Resources

Managed Care Enrollees Gain Ground

AARP reports on how states are protecting people in managed care plans.
 Managed Care
An organized system for delivering comprehensive mental health services that
allows the managed care entity to determine what services will be provided to an
individual in return for a prearranged financial payment. Generally, managed care
controls health care costs and discourages unnecessary hospitalization and
overuse of specialists, and the health plan operates under contract to a payer
   
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Traditional Choice® Indemnity Plan

With the Traditional Choice indemnity plan, you have maximum flexibility to
manage your health care.

You can use any recognized physician, hospital or health care provider for
covered services. No referrals are necessary, ever. Whether you're at home
or traveling, the same benefits apply wherever you are. Certain services,
including but not limited to non-emergency inpatient hospital care, require
precertification.

We are committed to helping you take charge of your health through a

number of proactive health and wellness programs.

1. Traditional Indemnity
These plans are rarely provided any longer due to their high expense. People who want pure freedom in the
selection of their medical providers and who are willing to pay more for insurance may choose these plans.

Advantages:

 The plan allows an individual to choose any health care provider they wish
 They have few restrictions 

Disadvantages:

 There are no financial incentives to reduce patient financial responsibility

 The absence of cost containment features creates high premiums and employee contribution costs 

2. Health Maintenance Organization (HMO)

These plans have become very popular due to their low cost and comprehensive health insurance coverage.

Advantages:
  There are no deductibles or coinsurance expenses, only a copayment
 The cost of premiums and employee contributions are low due to the high presence of cost
containment features
 Paperwork is practically eliminated for the patient as there are no claims to submit and no EOBs to
receive

Disadvantages:

 You can only see a physician within the HMO network

 The primary care physician acts as a "gatekeeper" to specialists
 There is a larger number of cost containment elements in the plan (authorizations, referrals, etc.)

3. Preferred Provider Organization (PPO)

These plans combine aspects of both a Traditional Indemnity and HMO plans. The cost for this plan is also
"middle of the road."

Advantages:

 The plan offers financial incentives to see physicians in their preferred provider network
 Many services require the patient to pay just a copayment, such as for outpatient visits or
prescriptions
 A person may continue to see a physician who is not part of the preferred provider network, but at
a reduced payment

Disadvantages:

 Deductibles and coinsurance do apply for many services, such as hospitalizations and out-of-
network services
 Claims are submitted by the medical provider, making it important for the health plan to pay the
claim correctly
 The premiums and employee contribution costs are higher than those of any HMO, but lower than
a Traditional Indemnity Plan