Managed Care Plan/Network based Coverage

More than half of US citizens who have availed health insurance coverage are enrolled in a Managed Care Plan. Managed care plans usually cover a wide array of health services. Under such healthcare plans, incurred medical costs are lower when the policyholders or patients make use of the doctors, consultants, hospitals and other healthcare providers who participate in the plan.

Hence Managed Care is also called as Network based coverage. In most cases, the individual is not burdened with paperwork i.e. he/she does not have to fill any insurance forms or submit any claims to the insurance company while availing the facilities of In-Network Providers. Usually, the individual has to bear a co-pay for each visit to the doctor or hospital or other healthcare providers. The concerned policyholder’s co-pay varies depending on whether he/she seeks to visit primary care doctor or a medical specialist or upon receiving receive a generic or brand name prescription drug from the pharmacist. Mostly Managed Care Plans compile a list of drugs and medicaments that they cover which is termed as a Formulary. The co-pay for prescription drugs will probably depend on whether the individual has been prescribed for purchasing a generic drug, a brand name formulary drug or a brand name drug not on the plan’s Formulary. Be sure to check the formulary of the plan considered by the concerned individual. It must be made sure whether it would cover any routine prescription drugs that the concerned policyholder and his/her family members consume. Certain Managed Care Plans have a Mail-Order Pharmacy option implying that the individual can send his/her physician’s prescriptions for routine maintenance drugs. For eg. High-blood pressure medicine, drugs to control blood sugar, Cardiac Care and other drugs used on a regular basis etc to the Mail Order Pharmacy. In most cases, the concerned individual receives a 3-month supply of his/her medication by return mail. You still expend a co-pay, but the incurred medical expenses may be lower than that incurred at a local retail pharmacy. If the individual chooses to enroll in a Managed Care Plan instead of an Indemnity Plan, he/she may have lower out-of-pocket expenses incurred towards health care, as long as the individual consults the doctors who are part of the plan (network providers).

There are basically three main types of Managed Care Plans:

Health maintenance organizations (HMOs).
Preferred provider organizations (PPOs).
Point-of-service plans (POS).

All three types of Managed Care Plans have contracts with doctors, hospitals and other healthcare providers. Under such plans, such service providers have agreed on certain fees with the insurance companies. As long as the concerned policyholder has access to medical facilities and benefits from a plan provider, he/she is responsible only for any cost-sharing required under his/her healthcare insurance policy cover.

Health Maintenance Organizations (HMO)

HMOs (Health Maintenance Organizations) are well-known for primary focus on prevention and wellness aspects across USA. Traditionally, HMOs were set up across USA with the idea that an individual received most of his/her healthcare benefits from one primary care physician who is aware of such an individual’s total health picture. If such an individual belongs to an HMO, usually he/she must receive all his/her medical care from the network providers, except in cases of emergencies. HMOs usually have flat co-payments rather than deductibles and co-insurance and there is no lifetime limits on coverage. After the individual enrolls in an HMO, he/she will typically need to select a primary care physician, who will be responsible for coordinating all the requirements pertaining to his/her healthcare. Primary care physicians may be family practice doctors, internists, pediatricians, obstetricians-gynecologists or general practitioners.

In case, if an individual falls sick, the primary care doctor will examine the individual first, unless in cases of absolute emergency. Thereafter the primary care doctor will give the patient a referral, if the physician deems it necessary for seeking a specialist’s opinion. Usually, HMO will not provide coverage for a specialist unless the individual possesses this referral. In majority of the cases, such an individual must see a specialist who participates in the HMO. Sometimes, under special circumstances, HMO patients may be referred to providers outside the HMO network and still receive coverage for their medical treatment. If the concerned individual need to be admitted to the hospital and it is not an emergency, he/she needs to obtain pre-certification from the plan. Mostly, the concerned physician or hospital takes care of this aspect for such patients. It should be borne in mind that Non-emergency hospital care may not be covered without pre-certification. In case of an emergency admission, the policyholder or a family member, the individual’s doctor or treating hospital will need to contact the policyholder’s HMO plan within a certain timeframe (i.e. usually within 48 hours of admission) so as to obtain confirmation in writing pertaining to the coverage regarding the hospital stay.

Nowadays, some HMOs do not follow this “primary care model.” Incase if the individual is considering a traditional HMO, it becomes imperative to compare the features and requirements among the various HMO plans available in the US markets.

Point-of-Service Plans (POS)

POS (Point-of-Service) health plans combine features from both fee-for-service and HMOs (Health Maintenance Organizations). It must be noted that POS plans offer more flexibility than HMOs in choosing physicians, hospitals and other healthcare providers. POS (Point-of-Service) plans have primary care physicians who coordinate regarding the patient-care. Premiums tend to be somewhat higher in POS (Point-of-Service) plans in comparison to the traditional HMOs (Health Maintenance Organizations). Under such plans, it is a well-known fact that greater the emphasis on In-network care, the lower the corresponding premiums and simultaneously the more comprehensive the healthcare benefits will be provided under such coverage. Usually, both – the consumers and employers make tradeoffs as to decide which is more important: a greater choice of providers or a lower premium. If an individual is enrolled in a POS plan, his/her out-of-pocket expenses will be less, provided if he/she utilizes a healthcare provider who is part of the plan (i.e. a network provider). However, the individual will still get some reimbursement if he/she receives a covered healthcare or medical service from a provider who is not a part of the network. In such cases, the individual’s reimbursement will be at a lower level in comparison to the utilization of healthcare facilities by an in-network provider. If by chance, the policyholder chooses to go out of network coverage for his/her healthcare care, he/she may have to meet a deductible before the insurance plan begins to reimburse the benefits. Such an individual may have to pay the bill by self and submit paperwork (or documentation work) to the plan for reimbursement of covered expenses. When such an individual decides to opt out of the out of the plan’s network for availing healthcare facilities, then POS health plans work like Fee-for-Service Plans and charge Co-insurance for such an individual.

Many HMOs offer an indemnity-type option known as a POS (Point-of-Service) plan. The primary-care doctors in a POS plan usually make referrals to other healthcare providers under the plan. In addition, the concerned policyholders or its members can refer themselves outside the ambit of the plan and still get some coverage for the incurred medical treatments.

If the doctor makes a referral out of the network plan, the plan will reimburse the eligible and relevant healthcare expenses incurred as part of the treatment. Incase, if an individual prefers to refer to a healthcare provider outside the network plan, provided that the service is covered under the plan, the concerned policyholder will have to pay co-insurance.

Preferred Provider Organizations (PPOs)

PPOs (Preferred Provider Organizations) health plans combine features from both fee-for-service and HMOs (Health Maintenance Organizations). It must be noted that PPOs plans offer more flexibility than HMOs in choosing physicians, hospitals and other healthcare providers. Such plans do not have the facility of primary care physicians who coordinate regarding the patient-care. Premiums tend to be somewhat higher in PPOs (Preferred Provider Organizations) plans than in traditional HMOs (Health Maintenance Organizations). Under such plans, it is a well-known fact that greater the emphasis on In-network care, the lower the corresponding premiums and simultaneously the more comprehensive the healthcare benefits will be provided under such coverage. Usually, both – the consumers and employers make tradeoffs as to decide which is more important: a greater choice of providers or a lower premium. If an individual is enrolled in a PPO plan, his/her out-of-pocket expenses will be less, provided if he/she utilizes a healthcare provider who is part of the plan (i.e. a network provider). However, the individual will still get some reimbursement if he/she receives a covered healthcare or medical service from a provider who is not a part of the network. In such cases, the individual’s reimbursement will be at a lower level in comparison to the utilization of healthcare facilities by an in-network provider. If by chance, the policyholder chooses to go out of network coverage for his/her healthcare care, he/she may have to meet a deductible before the insurance plan begins to reimburse the benefits. Such an individual may have to pay the bill by self and submit paperwork (or documentation work) to the plan for reimbursement of covered expenses. If an individual avails a plan in a PPO (Preferred Provider Organizations), such an individual will not need a referral to visit a specialist for seeking medical consultation or for availing other types of healthcare benefits, but at the same time he/she may need to carry some documents in person. It is essential that the concerned policyholder makes sure to ask his/her physician if he/she requires a written order or other documentation when referred to a specialist, laboratory, or other healthcare service providers. When such an individual decides to opt out of the out of the plan’s network for availing healthcare facilities, then PPOs health plans work like Fee-for-Service Plans and charge Co-insurance for such an individual.

For PPOs (Preferred Provider Organizations), this co-insurance may be different than the co-insurance charged for in-network providers. Also, the individual may have to pay the total cost of healthcare services for unplanned hospitalization and subsequently file a claim with his/her insurance company to get the allowable reimbursement for Out-of Plan healthcare facilities.