Managed Care: Ways the Cost Can Be Brought Down - Essay Example

Managed care organizations mean two things: health insurance and delivery of health care at relatively low rates.

There are different types of managed care organizations. Some of them are as follows:

1. Health Maintenance Organization (HMO):

This is tipped as the first form of managed care. HMOs refer to organizations wherein insurance plans, hospitals, and physicians are either closely related or are a part of the same organization. An important example of an HMO is Permanente. An HMO has complete charge of the hospital including the salaries paid to the doctors In case of emergency, patients using the HMO plan have to use the plan-affiliated care provider.

The biggest advantage of the HMO plan is that it offers a fixed amount of money that can be spent on the patient. This on its own restricts the patients and physicians and they tend to opt for the most cost-effective treatment or drug. Thus, one ends up paying less for an HMO plan compared to the rest. The biggest disadvantage also emanates from its biggest advantage. HMO plans tend to focus more on cost control than the quality of care.

2. Fee-for-Service or FFS:

This type of plan gives a lot of liberty to the patient. It gives them the freedom to choose their preferred doctor or healthcare provider. Physicians then get a fee for every service including the visit, the procedure, and the tests. However, here freedom does not trump cost. Patients opting for this type of plan end up paying more.

3. Independent Practice Association, or IPA:

In this kind of association, physicians are completely empowered. They can have patients from the HMO and FFS plans.

4. Preferred Provider Organization, or PPO:

In this type of plan, the rates are low but physicians get more patients to deal with. This kind of plan works both ways. Patients not just get better care and freedom but they also get it at lower rates. On the other hand, physicians get more business. Both sides benefit from this type of plan.

5. Point of Service Plans, or POS.

This type of plan resembles the HMO plan in many ways. Here the doctors do not have to work in specific hospitals. They tend to receive compensation based on the number of patients they are handling per year. It is per patient per year compensation.