Managed Care

Managed care is the major health services program subsequent to the arrival of Medicare to reduce the cost of health care services for patients. Managed care plans are health insurance plans frequently involves unreasonable limits on visits with health care providers and medical facilities. The plan's network is divided into the restrictive plans and flexible plans to decide coverage area and the amount. As per the client’s plan, the cost is more or less (U.S. National Library of Medicine, 2009).

The managed care plans are mainly divided into three types: Health Maintenance Organizations (HMO), Preferred Provider Organizations (PPO), and Point of Service (POS). HMOs shells out only for within the network, PPOs also makes part payment for outside network and POSs offers flexibility to choose between the two care plans (U.S. National Library of Medicine, 2009). The various programs included under managed care are: motivate physicians and patients to recheck the need for specific costly services, select and fix health care providers, restrain inpatient admissions and lengthy stay, control high-cost health care cases etc. (National Library of Medicine, 2009).

In 1798, East Coast shipping companies started health care program for their maritime employees tuned with managed care model. Then, Oklahoma and California developed early programs which gave rise to recent managed care organizations (MCOs) (Liberman & Rotarius, 1999). In 1973, Congress passed the Health Maintenance Organization Act, which motivated proliferation of HMOs, the first form of managed care. Gatekeeping system was eliminated by a Harvard Community Health Plan in 1998.  This led to direct entry to specialists on visits to primary care physicians. It has been reported that major changes were not observed for availing specialty services by adults in the first 18 months of omission of gatekeeping system. This decision was supposed to be in patient’s and physician’s favor, and against many health plans for controlling the costs and coordinating care. The use of specialty services by commercially insured adult members of a group-model health maintenance organization were not affected by getting rid of gate keeping system (Ferris et al., 2001).

Managed care is a driving force in the evolution of the U.S. health care system, but it no longer is viewed by most employers and federal and state governments as the primary means by which health care costs can be brought under control due to vested interest of individuals in America’s health care delivery system (Boyle & Callahan, 1995). Managed care system is connected with several legislative acts because of which it drew into controversy to give best service in the interests of patients. The clinicians, hospitals and their management, insurance companies and other purchasers of care, pharmaceutical concerns, lawyers, and patients are the stakeholders of the managed care system (Liberman & Rotarius, 1999). All the stakeholders are corrupted at one point or other leading to improper use of the health care systems. These irresponsible stakeholders charged taxpayers more than $15 billion dollars with $100 and $250 billion total health industry fraud (Liberman & Rotarius, 1999).

Healthcare system reforms are important from the point of view of solving issues related to access, cost, and quality. To tackle with the root cause of the issue, it is important to identify the fallacies in the current health care system & understand potential change initiatives. Since the cost factor is the major problem, it is necessary to emphasize preventive care, qualitative medical practice which results in positive health outcome, alteration in reimbursement system, and push coordinated and integrated systems of care (Karpf, Lofgren, & Perman, 2009). The goal of reform is to deliver efficient care with the reduced cost which is same as managed care model with limits on spending. Managed care programs should provide acute care referrals, limit the authority of MCOs to decide coverage all higher risk populations, control profit motive tactics of service providers, reinsurance coverage through realistic contracts for MCOs and their associated providers (Liberman & Rotarius, 1999). The personalized uncompromising treatment strategies with responsible economic outlook are essential to direct success of managed care model.

The trade association America’s Health Insurance Plans has reported that the managed care is nearly ubiquitous in the U.S.; 90 percent of insured Americans are now enrolled in plans with some form of managed care. The coordinated efforts and honest health services of all stakeholders can deliver efficient, competitive and qualitative health care.


Boyle, P. J. & Callahan, D. (1995). Managed care in mental health: the ethical issues. Health Affairs, 14 (3), 7-22.

Ferris, T. G., et al. (2001). Leaving Gatekeeping Behind ? Effects of Opening Access to Specialists for Adults in a Health Maintenance Organization. New England Journal of Medicine 345 (18), 1312-1317.

Karpf, M., Lofgren, R., & Perman, J. (2009). Commentary: Health Care Reform and Its Potential Impact on Academic Medical Centers. Academic Medicine, 84(11), 1472-1475. doi: 10.1097/ACM.0b013e3181bae9a1

Liberman, A. and Rotarius, T. (1999). Managed Care Evolution – Where Did It Come from and Where Is It Going? Retrieved on August 17, 2009 from

U.S. National Library of Medicine, last updated: 11 June 2009. Managed care

Fast Facts”. America’s Health Insurance Plans.

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