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According to the trade association America’s Health Insurance Plans , 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.1 Paul Starr suggests in his analysis of the American health care system (i.e., The Social Transformation of American Medicine) that Ronald Reagan was the first mainstream political leader to take deliberate steps to reform American health care from its longstanding not-for-profit business principles into a for-profit model that would be driven by the insurance industry. The rise of managed care was touted by the U.S. health insurance industry as a way to lower the rate of medical Inflation in the 1990 s. But managed care has not been successful in lowering the rate of medical inflation. In fact, U.S. medical inflation is now two or three times the rate of overall inflation, as it was during much of the 1980 s. Managed care has proven to be a successful for-profit business model. Corporations, individual investors, and health industry executives have reaped billions in profits. But critics have argued that managed care has been an unsuccessful health policy as it has contributed to higher health care costs, increased the number of uninsured citizens, driven away health care providers, and applied downward pressure on quality. ''The National Directory of Managed Care Organizations, Sixth Edition'' profiles more than 5,000 plans, including new consumer-driven health plans and health savings accounts. FORMS OF MANAGED CARE There are several forms of managed care. Plans range from more restrictive to less restrictive, and include: Health Maintenance Organization (HMO) See Also: Health Maintenance Organization Proposed in the 1960s by Dr. Paul Elwood in the "Health Maintenance Strategy", the HMO concept was promoted by the Nixon Administration as a fix to rising health care costs and set in law as PL 93-222 . As defined in the act, a federally qualified HMO would in exchange for a subscriber fee (premium) allow members access to a panel of employed Physicians or a network of doctors and facilities including Hospital s. In return the HMO received mandated market access and could receive federal development funds. In practice, an HMO is an Insurance Plan under which an Insurance Company controls all aspects of the health care of the insured. In the design of the plan, each member is assigned a "gatekeeper", a Primary Care Physician (PCP) who is responsible for the overall care of members assigned to him/her. Specialty services require a specific referral from the PCP to the specialist. Non-emergency hospital admissions also required specific pre-authorization by the PCP. Typically, services are not covered if performed by a provider not an employee of or specifically approved by the HMO, unless it is an emergency situation as defined by the HMO. Financial sanctions for use of emergency facilities in non-emergent situations were once an issue; however, prudent layperson language now applies to all emergency-service utilization and penalties are rare. Since the 1980s, under the ERISA Act passed in Congress in 1974 and its Preemptive effect on state common law tort lawsuits that "relate to" Employee Benefit Plans, HMOs administering benefits through private employer health plans have been protected by Federal law from Malpractice Litigation on the grounds that the decisions regarding patient care are administrative rather than medical in nature. See " Cigna V. Calad ", 2004. Preferred Provider Organization (PPO) See Also: Preferred provider organization Rather than contract with the various insurers and third party administrators, providers may contract with preferred provider organizations. They generally agree to a discount from a relative value-based fee schedule or simply a discount from whatever they bill (which is perhaps subject to reasonable, usual, and customary limitation (generally a percentile of national or regional charge data)). The PPO, in turn, promises convenience, less administrative expenses, and/or prompt payment. In terms of using such a plan, unlike an HMO plan, which has a copayment cost share feature (a nominal payment generally paid at the time of service), a PPO generally does not have a copay and instead offers a deductible and a coinsurance feature. The deductible represents the first dollar of coverage and is paid by the patient. After the deductible is met, the coinsurance portion applies. If the PPO plan is a 80% coinsurance plan with a $1,000 coinsurance out of pocket, then the patient will pay 20% of the allowed provider fee up to $1,000. After this amount has been paid by the patient, the insurer will pay 100% of subsequent costs. Because the patient is picking up a substantial portion of the "first dollars" of coverage, PPO are the least expensive types of coverage {Link without Title} . Point Of Service (POS) See Also: Point of service plan A POS plan utilizes some of the features of each of the above plans. Members of a POS plan do not make a choice about which system to use until the point at which the service is being used. In terms of using such a plan, a POS plan has levels of progressively higher patient financial participation as the patient moves away from the more managed features of the plan. For example, if the patient stays in a network of providers and seeks a referral to use a specialist, they may have a copayment only. However, if they use a network provider, but do not seek a referral, they will pay more, and so on. Managed care in indemnity insurance plans Many "traditional" or " Indemnity " health insurance plans now incorporate some managed care features such as precertification for non-emergency hospital admissions and utilization reviews. NOTES AND REFERENCES FURTHER READING
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