Managed care plans are health insurance plans or systems that coordinate the quality and cost of care for its members. If you enroll in a managed care plan, you will usually need to choose health care providers from a network. Going outside of the network will either not be covered or will only be partly covered. Network providers will submit claims to the insurance companies for you. Members buy into a network, pay a set amount each month, and then pay more as they need services. Many of these plans require you to pay a co-payment (co-pay) for visits to doctors' offices, clinics, and hospitals.
Traditional indemnity plans (or reimbursement plans) reimburse you for medical expenses performed by any provider. These plans usually have you pay more out of pocket expenses, such as deductibles and co-pays. They allow you to see the health provider of your choice, but the amount you are reimbursed may be limited.
Managed care plans vary in how much freedom you have when choosing providers. In general, you will pay more for greater choice in providers. The three basic types of managed care plans are:
HMO members pay a fixed monthly fee and get a variety of medical services. These plans usually cover only doctors, hospitals, labs, and others within the organization. But the range of care is complete and the prices are often low. Most drugs are also covered. Most HMOs require that you select a primary care doctor. This doctor will give you a referral to allow you to see a specialist or enter a hospital (except in an emergency). HMOs like to focus on preventive care to keep members healthy. Your monthly fee stays the same no matter how often you need care over a year.
These plans often have a higher monthly premium than HMOs. They cover only a percentage of your care (about 80%). They charge a co-pay as well as a deductible which is the minimum amount you must spend on your own health services before the PPO kicks in. PPOs have in-network doctors and hospitals, but you can also get care from specialists or other doctors within the network without a referral from a primary care provider. You can also go outside of network, but it will cost you much more for each visit.
This plan is a cross between the PPO and HMO plans. In general, these plans charge you less for using in-network providers. They also require you to have a primary care doctor, but you can be seen by a specialist out of the network on your own at a higher cost to you.
Plans that cost more per month generally provide you with more choices. But they also may cost more when a service is provided.
Some plans provide drugs discounts and others do not. You or your employer will need to select another company for your prescriptions if you do not want to pay full charges. Preventive dental and vision coverage may be provided by some plans, but not others.
America's Health Insurance Plans
US Department of Labor
Clancy CM. How to get a good value when choosing a health plan. US Department of Health and Human Services Agency for Healthcare Research and Quality website. Available at: http://www.ahrq.gov/news/columns/navigating-the-health-care-system/110111.html. Accessed October 18, 2021.
Indemnity vs. managed care. Health Insurance website. Available at: http://www.agencyinfo.net/iv/medical/types/indemnity-managed.htm. Accessed October 18, 2021.
Managed care. New York State Department of Health website. Available at: http://www.health.ny.gov/health_care/managed_care. Accessed October 18, 2021.
Last reviewed October 2021 by EBSCO Medical Review Board Last Updated: 10/18/2021