What does the term "managed care" mean with regard to health insurance?

Personal Finance December 08, 2013|Print

The easiest way to define managed care is to compare it with traditional health care. Under traditional health care, doctors and hospitals are independent of each other. Doctors and hospitals set their own fees for services. You can go to any doctor you choose, and you are responsible for determining if your doctor is qualified to provide the care you need.

Under managed care, doctors and hospitals, as well as other health care providers, agree to work together through health care networks. These networks agree to provide health care services to members for a set fee or price. Patients are encouraged to use providers who are part of the network.

If you go out of the network for care, you will generally have to pay more for health care. The network sets criteria for the selection of health care providers and also monitors the amount of care and quality of services provided to members. The most common form of a managed care health insurance plan is a health maintenance organization (HMO).

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