What is Managed Care?
What is now called "managed care" began in the 1940s with Health Maintenance
Organizations (HMOs). Families getting medical care at HMOs were
urged to get yearly checkups, and to seek preventive care and early treatment
in case of illness. This Proved to be cost-effective.
As health care costs rose, employers, for their employees, began to
sign contracts with companies offering to "manage" health care. The
managed care company organizes doctors into cost conscious groups.
Since the 1980s, more and more employee benefit programs have contracted
with managed care companies. There are now hundreds of managed care
companies. Their rules differ. Contracts change from year to
In general, managed care pays for what is "adequate" and "medically
necessary," using the least costly alternative. Keep in mind:
States are now looking to the managed care industry to provide public health
care, including mental health and related services. In the past,
State and local governments allowed service providers to bill Medicaid
and Medicare directly, after the services were provided, on a "fee for
service" basis. With managed care, providers will be under contract
with the managed care company. The company may expect to authorize
each piece of service they consider "medically necessary."
Managed Care Means Controlling Health Care Costs.
Managed Care Discourages Unnecessary Hospitalization.
Managed Care Discourages the Overuse of Specialists.
Managed Care Services Depend on the Contract.
Managing care is harder than managing dollars. For people with
long-term mental illness, managed care is a new way of delivering services
that has not been tried before. This overview, for consumers of managed
mental health care--and their families -- describes:
What to Look For
What to Ask
By Center for Mental Health Services
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last modified 2/15/99