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Managed Care

What is managed care?

Managed care describes a type of healthcare that focuses on reducing costs while maintaining a high quality of care.

An example of a managed care plan is a home maintenance organization (HMO), which lowers costs by limiting users to providers within a small local network. This also allows HMOs to closely manage care. HMOs require users to have a primary care provider (PCP) who coordinates all their care.

Other types of managed care plans include: 

  • Preferred provider organization (PPO): Members can see any provider they like in- or out-of-network, although they typically pay less for providers in-network. 

  • Point of service (POS): A hybrid of PPOs and HMOs where members can see in- or out-of-network providers, but their share of the costs is higher. They may also need to see a PCP for care management or referrals. 

  • Exclusive provider organization (EPO): Members are often required to see in-network doctors, but they may not be required to see a PCP or get a referral. 

Why is managed care important?

A managed care plan is important because it allows users to pay less for healthcare without sacrificing the quality of their care. Additionally, some more flexible options, such as PPO or POS, enable users to visit whichever healthcare provider they like, although there is often an incentive to remain in-network.

These reduced costs allow managed care organizations to focus on prevention and care management, which helps patients find better outcomes and live healthier lives.