There are several ways to manage healthcare costs, and a managed care health plan like IEHP.org is one of them. States use a variety of mechanisms, including risk and acuity adjustments, medical loss ratios, and incentive arrangements. A managed care plan has rates and co-pays set by CMS, usually for 12 months.
Managed care plans
How managed care health plans work varies depending on the type of plan. Members generally pay a co-payment for services and a deductible before their benefits begin. The deductible is an amount that the patient must pay each year to cover uninsured health care costs. Alternatively, the patient can be charged fee-for-service, meaning that they are charged for the services they receive regardless of whether they are within or outside the network. A managed care health plan usually has a gatekeeper, such as a primary care physician, who coordinates patient care and makes referrals for specialists.
States vary in how they set rates for managed care health plans. Some use a competitive bidding process, while others set sound actuarial rates. In addition to these two approaches, some states use a hybrid system, which involves placing a range of rates for a managed care plan and then asking plans to bid competitively within that range.
HMOs
HMOs are managed care health plans in which members choose a primary care provider for their primary care needs. These physicians are responsible for providing basic medical care for the member and making referrals to specialists. They also provide access to specialists and other services within the HMO’s network. In most cases, patients must make a referral to access a specialist, but this may only sometimes be necessary. The financial responsibility for in-network services has usually consisted of a fixed co-payment.
While the HMO model has proved successful in some cases, it has also suffered several drawbacks. The biggest problem is the financial sustainability of HMOs. Because they use a prepaid model, they must make a lot of assumptions about future costs and revenues. It often leads to under and over-estimation of claims and funds. Other problems are the underpricing of medical services and the lack of cost-shifting. Despite these challenges, there are still numerous ways to improve HMOs.
PPOs
A PPO is a managed care health plan that negotiates fees and schedules with healthcare providers. These agreed-upon rates are often lower than the individual would pay out of pocket. A PPO’s network of providers is extensive, allowing the participating individual to use any healthcare provider in the network. However, services outside the web are subject to higher co-payments or deductibles. In addition, service providers may charge a higher rate for services outside the network. If clients want to stay out of the network, they can use another health insurance provider, usually at a higher cost.
A PPO is similar to an HMO but allows more flexibility in choosing providers. A PPO does not require the patient to see a gatekeeper physician unless they need a specialist. A PPO also covers out-of-network expenses for a lower percentage. However, a PPO typically requires the patient to pay a deductible. Despite being the most common type of Managed Care health plan, it is also one of the most expensive.
Point of service plans
A point-of-service health plan is where you can visit providers that aren’t in your health plan’s network. After meeting an out-of-network deductible, the health plan will reimburse you for some of the cost. This reimbursement is based on reasonable and customary, and the percentage varies by program.
Point-of-service plans are similar to Health Maintenance Organizations, with the main difference being that they let members see providers outside their network. Typically, in this type of health plan, members can only see providers outside their network after being referred by their primary care physician. Because of this, out-of-network services cost members a higher percentage of their total cost.
Medicaid
Medicaid-managed care plans work much like those for private insurance, except enrollees can only see doctors in their plan’s network. They must also follow specific rules to access care. They are assigned a primary care provider who can refer patients to specialists or authorize non-emergency hospitalizations. The primary care provider must provide medically necessary care for enrollees. It means that Medicaid benefits include many benefits not included in private insurance.
The NC Medicaid department based its decision partially on performance in priority provider/service groups. It also evaluated network adequacy results using the May 2022 Standard Plan network, which included different provider/service groups.
