Managed Care

Refers to a variety of developing health care delivery arrangements, characterized by the integration of finance and delivery of care (sharing of financial risks), the utilization of a "preferred network" of providers, and a capitated system of delivery that utilizes gatekeeping mechanisms to make sure services considered un-necessary or referrals outside the network are kept to a minimum. Managed care emphasizes the appropriate utilization of services and seeks to increase quality through coordination of care and accountability for outcomes. All of these characteristics and goals present us with a multitude of ethical issues. The ideal goal of managed care is a system that delivers value by giving people access to quality, cost-effective health care. (See: CCHC Position Statement on Managed Healthcare).

Health Management Organizations (HMO) and Preferred Provider Organizations (PPO) are two of the more common types of managed care arrangements. An HMO is an organization that arranges to cover specific health care services at a fixed price for each insured patient (see capitation). The HMO pays a fixed amount of money to the provider (doctor/hospital) to cover a specific number of patients. This fixed amount of money is paid to the provider regardless of the amount of health care services needed or utilized by the insured individual. A PPO is an insurance arrangement whereby the employer/company (payor) has developed a network of preferred providers (doctors or hospital) who have agreed to care for the people who are insured by the PPO at a discounted rate. Unlike a HMO, preferred providers are paid only when they have treated an insured individual.

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