Managed Care

This is a common term today and there is no one generally accepted definition. For insurance companies, the term is often used to describe the many cost and care management features of health insurance plans. The most significant managed care feature of health insurance plans is utilization review programs that evaluate the appropriateness, necessity, and quality of health care provided to the policyholders. These programs include requirements (as described below) for hospital preadmission authorization, second surgical opinions, hospital stay reviews and planning, and case management. Utilization review is provided by nurses or physicians employed by or contracted with the insurer. Other examples of managed care features are centers of excellence, preferred provider arrangements, and prescription drug copayment plans.

Hospital Preadmission Authorization

Hospital preadmission authorization requires that the insured individual receive authorization to be admitted to a hospital in nonemergency cases. If the individual fails to receive prior authorization, benefits will be reduced.

Case Management

Case management is used for individuals with high-cost illnesses such as cancer, heart disease, and diabetes. Usually a nurse employed by the insurer monitors the individual’s treatment and helps develop a treatment plan to achieve the best outcome and the most cost effective use of health care services for the patient.

Concurrent Hospital Review and Discharge Planning Reviews

Concurrent hospital review and discharge planning reviews take place for any hospitalization, not just high cost illnesses, and involves monitoring the necessity of continued hospitalization. They are intended to ensure the individual stays in the hospital only as long as medically necessary and when discharged, receives appropriate care.

Centers of Excellence

Centers of excellence are specific providers selected by the insurer that provide fairly low volume, high risk procedures such as transplants and heart surgery at reduced costs. These providers have an expertise in the procedure, and therefore provide high quality care, with fewer complications and shorter hospital stays.

Preferred Provider Arrangements

A preferred provider arrangement is a contract, agreement, or arrangement between an insurer and a health care provider in which the health care provider agrees to provide services to individuals covered under the insurer’s health plans and the benefits of the health plans include incentives for individuals to use the service of that provider.

Incentives generally include lower deductibles and coinsurance payments and, therefore, it may be to the individual’s advantage to use preferred providers. In Alaska, insurers are prohibited from refusing to pay any benefits for the use of providers that have not entered a contract with the insurers.

Prescription Drug Copayment Plans

Prescription drug copayment plans encourage the use of generic drugs, which can be as much as 50% less expensive than brand-name drugs.  The individual will generally be required to make a higher copayment if they choose to use a brand-name drug when a generic version is available.