Managed Health Care Plans and Coverage
What is managed health care?
During the Roosevelt years in the 1930s a form of managed care began for Americans seeking personal health insurance. Over the years the form of managed care evolved by way of State and Federal legislative initiatives leaving us with three basic types of managed care plans. At present the majority of people with private health insurance have some type of managed care coverage for themselves and their families.
There are some similarities as well as important differences among the different types of managed care plans. Networks of health care providers contract with health insurance companies in order to share in the revenues as well as responsibilities associated with the delivery of health care to individuals in need. In order to provide low cost health insurance these health insurance companies offer policyholders significant financial incentives to use the providers in that network. The health insurance companies established wide-ranging and detailed criteria for selecting doctors and facilities, as well as codified procedures for optimizing the quality of medical care delivered to you.
PPOs and HMOs
The two major types of managed care systems are preferred provider organizations or PPOs and health maintenance organizations or HMOs. These health care management companies contract with physicians and medical facilities in an effort to supervise decisions authorizing care quality and costs. Similarly, both PPOs and HMOs create financial incentives for subscribers to use the contracted physicians and facilities and require providers to bear some financial risk for care.
In contrast to HMOs, PPOs health insurance plans permit you to use primary care providers outside the PPO network. You are given financial incentives to use doctors registered in the preferred group, however. These PPOs health insurance plans include small or no deductibles and lower coinsurance payments. PPOs health insurance plans are contractual arrangements that provide services at a discount to a volume group of patients. Unlike HMOs, which are prepaid systems, PPO providers operate on a fee-for-service basis, similar to traditional indemnity arrangements. The rates, however, have been pre-negotiated between the PPO provider and parties such as employers, unions, and insurance companies. In return for their discounted rates, the "preferred" group of doctors is guaranteed a specific volume of patients.
When assessing health insurance plans offered by a PPO or an HMO make sure that your health insurance quote provides disclosures about the plan's policy towards pre-existing condition, in particular whether the coverage plan requires specific minimum waiting periods before benefits accrue. Next, do you best to determine whether the health insurance plan states clearly what your out of pocket expenses are for each plan model. As you dig deeper, ask what the health insurance plan rate increases have been over, say the past 10 years.
Consider the following example: a visit to an in-network doctor might mean you'd have a $10 co-pay. In order for you to see an out-of-network doctor, you'd have to pay the entire bill up front and then submit the bill to your health insurance company for an 80 percent reimbursement. In addition, you might have to pay a deductible if you choose to go outside the network, or pay the difference between what the in-network and out-of-network doctors charge.
If you choose a provider outside the network, you're responsible for the entire cost of the visit. With a PPO, you can refer yourself to a specialist without getting approval and, as long as it's an in-network provider, enjoy the same co-pay. Staying within the network means less money coming out of your pocket and less paperwork. Preventive care services may not be covered under a PPO.
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