An MCO, or a managed care organization, offers affordable health care plans to participants. MCOs do this by designating techniques that specifically reduce health care costs and offer a better quality of care. Managed care was created by the Health Maintenance Organization Act of 1973 under the Nixon administration. This act, along with the nature of managed care, created competition among health insurance providers in order to provide a higher quality of care at competitive rates.
The techniques that managed care plans utilize focus on efficiency and cost to benefits ratios. These techniques include:
Having a network of health care providers offering multiple services to beneficiaries;
Having strict standards in choosing providers to be a part of a managed care network and administer the prescribed methods of the managed care plans;
Having review and evaluation programs in place to make managed care efforts more effective;
Having a strong initiative regarding preventative medical care;
and, Having program incentives to bolster financial responsibility among beneficiaries.
Managed care networks reduce costs by drafting contracts between care providers and physicians to ensure cooperation and regulate business practices. These networks also improve case management, record keeping, and patient education. The findings of a 2009 study conducted by America’s Health Insurance Plans show that patients that seek care outside of a MCO network are subject to higher fees across the board.
Managed care plans are offered by a multitude of providers. These providers include Health Maintenance Organizations, as created by the Health Maintenance Organization Act of 1973, are programs that designate hospitals and physicians to give medical care to HMO beneficiaries.
HMOs function at a state level and offer care by establishing contracts with medical centers, private physicians, or networks of hospitals, private practices and independent physicians. Most HMOs cover standard hospital care and doctor visits, but require referrals for beneficiaries to receive specialized care.
Preferred Provider Organizations also offer services through a network of physicians and offer memberships to health insurance providers and medical centers for services provided. Unlike an HMO, a beneficiary must pay the deductible for medical services to be rendered prior to receiving care and before the PPO can pay the health care provider.
Independent Practice Associations are a form of HMO care that allow independent physicians and private practices to care for HMO beneficiaries. IPAs permit private physicians to care for their regular patients in addition to HMO patients. IPAs are also nonexclusive, meaning a physician or practice can work with more than one HMO.
For profit managed care has been debated since its creation for several reasons. One reason is cost to beneficiaries due to the increase of medical services and the changing rates of managed care plans. Another reason is the amount of United States citizens that are uninsured that cannot pay for health care or managed care plans.