Managed Care

Managed care has little to do with managing care and much to do with managing cost. Today more than 85 percent of insured people are enrolled in some kind of managed care plan. These plans establish agreements with physicians hospitals and other health care professionals to provide services at reduced costs. Managed care plans may be health maintenance organizations (HMOs) preferred provider organizations (PPOs) or point-of-service (POS) plans. Managed care plans generally get doctors to participate by promising them exclusive access to a particular group of patients.

There are two basic types of ﾔmanaged careﾔ plans: the Capitated plan and the Preferred (or Network) plan.

These plans are sometimes called health maintenance organizations (HMO) or dental health maintenance organizations (DHMO). In this type of plan the doctor is paid an agreed-upon monthly fee for each person enrolled in the plan regardless of whether any participants use the doctor's service. The doctor in return has agreed to give treatment that patients may require provided that the plan covers the treatment. The patient may see only a participating doctor. The doctor may be financially penalized for referring the patient to a specialist. If a plan member visits a physician not on the list or goes directly to a specialist the member pays the bill.

Some HMOs offer indemnity-type options known as POS plans in which primary care physicians make referrals to other providers in the plan. Members can refer themselves outside the plan and still receive some coverage. If a physician refers someone out of network the plan will pay all or most of the bill. If a member refers to an out-of-network provider and the service is covered he will pay the co-insurance.

These plans are generally referred to as preferred provider organizations (PPO). The doctors participating in these plans are preferred by the plan company because they have agreed to discount their normal fees. In return for this discount the company promotes these participating doctors to the patient subscribers by listing them as specific preferred doctors in their plan. To encourage plan members to use these preferred doctors there is usually a substantial financial penalty for patients using non-participating doctors.

PPOs make arrangements with physicians hospitals and other care providers to accept lower fees for their services. Plan members can refer themselves to other physicians including those outside the plan but they will pay more of the bill.

All managed care plans rely on the volume discount principle in that by selling a larger volume of individual units of a product then it is possible to charge less for each unit and still produce the same or even greater profit.

While this volume principle may work well for discount stores it tends to break down when applied to health care especially in dentistry.

In dentistry the actual costs of performing a procedure tend to be fixed. Any given discount comes from the profit segment of a fee. Therefore no amount of volume would make up for the loss on each case. The participating doctor is then faced with a troubling ethical dilemma of being forced to cut corners in order to reduce overhead which may have the effect of reducing the quality of care or reducing the indicated care.

In spite of this dilemma many dentists have attempted to use managed care plans in their practice. By using the managed care plan in their practice the dentist must accept the problems associated with a two-tier practice where one level of patient receives the dentist's usual approach to treatment and pays the usual and customary fee and the lower second level of patients receives treatment as specified by the plan and is given a discounted fee.