Managed Care Plan Enrollment

Managed Care Plan Enrollment

One of the first issues related to managed care is the multitude of plans, often referred to by their acronyms. The three most common types of plans are the health maintenance organization (HMO), the preferred provider organization (PPO), and the point of service (POS). Although subcategories and variations exist for each of these plans, the basic structure and elements of each are as follows. Basic HMOs (also called “staff HMOs”) are a closed system in one physical setting in which the organization provides health care to enrollees, sets the rates for services, and pays its service providers, who function as employees (Levit, 2008).

As part of this plan, a doctor, usually a primary care physician (PCP), determines access to other services, such as specialty care. The term gatekeeper arose to describe an individual's PCP because of the major role these physicians play in controlling an individual's access to other services. When a PCP refers an individual for services within the network, the individual does not pay, but individuals are responsible for any services outside of the HMO. Hybrid versions of the HMO plan, such as the group model HMO, network HMO, or the mixed model HMO, have also recently sprung up (Levit, 2008).

The second type of managed care plan, the PPO, differs from the basic HMO plan. Here, providers are not located at one physical setting, but they still function as a network of providers. In this type, both doctors and patients can serve as gatekeeper and make referrals to other services. Unlike the basic HMO model, PPO members make a co-payment when they see providers within the network. Also unlike an HMO plan, members of a PPO can use services outside of their network, and the PPO plan will pay a reduced portion of the cost. However, enrollees pay less for services within the network (Levit, 2008).

The last general type of plan is the POS. For this plan, the decision to go in or out of the network is condition based; upon each new medical condition, the patient can make that determination. If the patient chooses to make a referral out of the network, only some fees are covered, but if the physician refers a patient out of the network, fees are covered.

There are several types of managed care organizations. A health maintenance organization (HMO) is a type of managed care organization that accepts all the risk for covered services. A predetermined health insurance premium is paid for the managed care organization to provide the covered services within the budget supported by the premium—absorbing any financial loss or retaining any financial gain.

This type of managed care organization saw rapid growth in the 1970s and 1980s after the passage of the Health Maintenance Organization Act of 1973. Employers with more than 25 employees had to offer at least one HMO to their employees. To be approved by the federal government, HMOs had to expand their benefit package beyond hospital and physician services, offering mental health ...