MANAGED CARE ORGANIZATIONS
Managed care plans are a type of health insurance. They have contracts with health care providers and medical facilities to provide care for members at reduced costs. These providers make up the plan’s network. How much care the plan will pay for depends on the network’s rules.
Plans that restrict your choices usually cost you less. If you want a flexible plan, it will probably cost more. There are three types of managed care plans:
- Health Maintenance Organizations (HMO) usually only pay for care within the network. You choose a primary care doctor who coordinates most of your care. Health Maintenance Organization (HMO): A type of health insurance plan that usually limits coverage to care from doctors who work for or contract with the HMO. It generally won’t cover out-of-network care except in an emergency. An HMO may require you to live or work in its service area to be eligible for coverage. HMOs often provide integrated care and focus on prevention and wellness.
- Preferred Provider Organizations (PPO) usually pay more if you get care within the network. They still pay part of the cost if you go outside the network. Preferred Provider Organization (PPO): A type of health plan where you pay less if you use providers in the plan’s network. You can use doctors, hospitals, and providers outside of the network without a referral for an additional cost.
- Point of Service (POS) plans let you choose between an HMO or a PPO each time you need care. A “managed care” plan can be defined as an integrated system that manages health care services for an enrolled population rather than simply providing or paying for them. Services within managed care plans are usually delivered by providers who are under contract to, or employed by the plan. Point of Service (POS): A type of plan where you pay less if you use doctors, hospitals, and other health care providers that belong to the plan’s network. POS plans require you to get a referral from your primary care doctor in order to see a specialist.
- Exclusive Provider Organization (EPO): A managed care plan where services are covered only if you use doctors, specialists, or hospitals in the plan’s network (except in an emergency).Exclusive Provider Organization (EPO):
There are different types of Marketplace health insurance plans designed to meet different needs. Some types of plans restrict your provider choices or encourage you to get care from the plan’s network of doctors, hospitals, pharmacies, and other medical service providers. Others pay a greater share of costs for providers outside the plan’s network.
Managed care plans use a variety of approaches to “manage” care, including care management (or utilization management) (CM/UM) tools such as hospital pre-certification, practice performance profiling and disease management (DM).
A managed care organization is a single organization which manages the financing, insurance, delivery and payment to provide health care services.
Financing – the MCO and employer negotiates a fixed premium per enrollee and the health services provided in the contract.
Insurance– the MCO acts as the insurance company, collecting premiums from enrollees (and employers share). The MCO cost is 15% to 25%, with the MCO assuming any risk that health care expenditures exceed contract costs.
Delivery – The MCO arranges all services with providers, hospitals, clinics and other services, through independent contracts. In large MCOs, physicians are employed by the company and the MCO owns the hospital.
Payment – there are two main methods for reimbursing medical providers
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Capitation – provider is paid a fixed monthly payment per enrollee called per member per month (PMPM)
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Fee for service– provider bills MCO after services are provided and are reimbursed based on a schedule of fees. Providers than discount their fees depending on number of MCO enrollees.
Preferred Provider Organizations (PPO)
Preferred Provider Organizations (PPO)
Preferred provider organizations are large networks of physicians, clinics, laboratories and hospitals. With PPOs, the patient can choose their primary care physician, specialists and facilities without need for a referral. Office visit co-pays range from $10 to $30, and the patient usually pays a deductible for out-of-network service. PPO monthly premiums are higher and out-of-network services require the patient to fill out claim forms and request reimbursement for expenses..
How PPO Plans Work
Each plan gives you flexibility to go to doctors, specialists, or hospitals that aren’t on the plan’s list, but it will usually cost more.
In most cases, prescription drugs are covered in PPO Plans. Ask the plan. If you want Medicare drug coverage, you must join a PPO Plan that offers prescription drug coverage. Remember, if you join a PPO Plan that doesn’t offer prescription drug coverage, you can’t join a Medicare Prescription Drug Plan (Part D). You don’t need to choose a primary care doctor in PPO Plans.
In most cases, you don’t have to get a referral to see a specialist in PPO Plans. If you use plan specialists, your costs for covered services will usually be lower than if you use non-plan specialists.type of plan?
- A PPO Plan isn’t the same as Original Medicare or a Medicare Supplement Insurance (Medigap) policy.
- PPO Plans usually offer extra benefits than Original Medicare, but you may have to pay extra for these benefits.
HMO Basics
Health Maintenance Organizations
Health Maintenance Organizations (HMOs) are networks of doctors and facilities that limit patients to services within the network. HMOs require that patients choose their primary care physicians, and can only use specialists and services that are referred by the primary care physician based on approval of the HMO. With HMOs, premiums are generally lower than other plans. Patients pay a standard co-pay for office visits and services. With the exception of some emergencies, there is no out-of-network coverage with HMOs. HMOs typically have limitations for coverages, such as number of treatments, tests per year and length of stay in hospitals and long term care.
In most HMO Plans, you can only go to doctors, other health care providers, or hospitals on the plan’s list except in an emergency. You may also need to get a referral from your primary care doctor.
In HMO Plans, you can’t get your health care from any doctor, other health care provider, or hospital. You generally must get your care and services from doctors, other health care providers, or hospitals in the plan’s network, except:
- Emergency care
- Out-of-area urgent care
- Out-of-area dialysis
In some plans, you may be able to go out-of-network for certain services, usually for a higher cost. This is called an HMO with a point-of-service (POS) option.
- If you get health care outside the plan’s network, you may have to pay the full cost.
- It’s important that you follow the plan’s rules, like getting prior approval for a certain service when needed.
CDHP Basics
Consumer-Driven, High-Deductible Health Plans (CDHP)
Consumer driven health plans are often called high deductible health plans. While premiums are lower as in HMOs, patient choice is similar to a PPO. According to a report of the National Center for Health Statistics (2014), deductibles of at least $1,250 for single coverage and $2,500 for family coverage. After the patient has paid out all of the deductible toward health expenses, the plan then pays 100% of medical care costs and co-pays no longer are applied. The combination of a pretax payment account with a high-deductible health plan is what is commonly referred to as a consumer-driven health plan (CDHP).
In terms of payment methods, CDHPs are often referred to as three-tier payment systems, consisting of a savings account, out-of-pocket payments, and an insurance plan. The first tier is a pretax account that allows employees to pay for services using pretax dollars. The account may be funded by the employer or the employee, depending on the type of account. The funds from this account can be used to satisfy the insurance plan deductible. The second tier is the difference, or the “coverage gap,” between the amount of money in the individuals pretax account and the deductible. The amount that is not covered by the pretax account must be covered by the insured. If health care expenses exceed the deductible amount, then the third tier, the high-deductible health insurance plan, kicks in. Once this happens, everything behaves like a traditional health plan. The insured pays a coinsurance amount for benefits until an out-of-pocket maximum is reached. Once the out-of-pocket maximum is reached, the high-deductible health plan covers all costs for the remainder of the year. Subsequent sections of this article describe the various types of pretax accounts and how they are used, most of the time in conjunction with a high-deductible health plan, as a low-cost substitute for a traditional medical care plan.
High-deductible health plans (HDHPs) are health plans with higher annual deductibles (the amount the insured must pay in medical costs before receiving coverage) and a higher annual out-of-pocket maximum (the amount that the insured pays before being fully covered for costs) than the typical traditional plan. One can view these plans as catastrophic coverage plans; HDHPs guard against major medical cost. Estimates from the National Compensation Survey Benefits show that 15 percent of private sector workers participate in a high-deductible health plan. NCS benefits data also show that in 2009 the annual median deductible of a non-high-deductible health plan in the private sector was $400 per individual coverage, while it was $1,600 for HDHPs.9 In turn, HDHPs have lower premiums compared with traditional health plans.10 The lower premiums translate into lower costs for both the employer and the employee. HDHPs share another important feature that distinguishes them from traditional healthcare plans; a person must be enrolled in an HDHP to open a health savings account (HSA) or an Archer medical savings account (MSA). The HDHP and the HSA or MSA work together to provide employees with tax-free savings earmarked for medical expenses.
A health reimbursement account (HRA) is set up for employers of CDHP patients to deposit tax-free money set aside for health care expenses, or the employer sets up a pre-tax health savings account (HSA). HSAs are also known as flexible spending accounts. There is a maximum contribution limit on HSAs that are established by the Internal Revenue Service. Both HRAs and HSAs rollover to the next plan year if there is any unused portion. HSAs can be taken by employee if they change employment, but HRAs are forfeited upon termination of employment.
https://www.bls.gov/opub/mlr/cwc/consumer-driven-health-care-what-is-it-and-what-does-it-mean-for-employees-and-employers.pdf
POS Basics
Point-of-service health plans (POS)
Point of service health plans are a combination of Preferred Provider Organizations and Health Maintenance Organizations. These plans have low co-pays and no deductible but are limited to in-network care. There are some out-of-network benefits, but patient pays a higher co-pays and meet a high deductible if they have not obtained a referral by the primary care physician. All medical care costs for out-of-network are paid by the patient who then submits claims for reimbursement.
POS plans require a lower premiums than PPO, but higher than HMOs.
Fee-for-Service Plans
Fee-for-service (FFS)
Fee for service plans are the highest cost health care plans, but have no network restrictions. Plan providers set limits on what they pay for basic and major medical coverage. Fee for service requires higher premium costs and lower deductibles. Typically, the physician bills the plan directly, but often patients must file reimbursement claims.
Fee-For-Service (FFS) plans generally use two approaches.
Fee-for-Service (FFS) Plans (non-PPO)
A traditional type of insurance in which the health plan will either pay the medical provider directly or reimburse you after you have filed an insurance claim for each covered medical expense. When you need medical attention, you visit the doctor or hospital of your choice. This approach may be more expensive for you and require extra paperwork.
Fee-for-Service (FFS) Plans with a Preferred Provider Organization (PPO)
An FFS option that allows you to see medical providers who reduce their charges to the plan; you pay less money out-of-pocket when you use a PPO provider. When you visit a PPO you usually won’t have to file claims or paperwork. However, going to a PPO hospital does not guarantee PPO benefits for all services received within that hospital. For instance, lab work and radiology services from independent practitioners within the hospital may not be covered by the PPO agreement. Most networks are quite wide, but they may not have all the doctors or hospitals you want. This approach usually will save you money.
Generally enrolling in a FFS plan does not guarantee that a PPO will be available in your area. PPOs have a stronger presence in some regions than others, and in areas where there are regional PPOs, the non-PPO benefit is the standard benefit. In “PPO-only” options, you must use PPO providers to get benefits.
https://www.opm.gov/healthcare-insurance/healthcare/plan-information/plan-types
Managed Care Options
