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A managed care network is a group of healthcare providers that have contracted with an insurance company to provide services at fixed rates. The insurance company sets rate limits and patient contributions for each procedure, and providers agree to these terms. Patients may have a deductible and a co-pay, and there may be layers of preferred and non-preferred providers. A coding system is used to manage the process.
A managed care network is a group of doctors, hospitals, and other healthcare facilities that have contracted to provide services to an insurance company’s customers at fixed rates. Each insurance company sets rate limits and patient contributions for each specific procedure, and all network providers agree to these terms. In many countries that do not offer public health care, this is the primary insurance model.
Typically, major insurance companies contract with a large percentage of the doctors, specialists, pharmacies, hospitals, and other providers available in a given area to create a large managed care network. When a patient is treated, your contribution is billed immediately and the rest of the bill is sent to the insurance company. The insurance company reviews the bill, adjusts it to meet the contractual terms, sends a notice of coverage to both the health care provider and the patient, and pays the approved portion of the bill directly to the health care provider.
A primary feature of the managed care network model is the coding system. Without it, the process would be virtually impossible to manage. Each procedure is assigned a code and the approved price is loaded into a computer database based on those codes. If the healthcare provider codes a bill incorrectly, it will be delayed and may be denied altogether.
In a managed care network model, the insurance company also sets the contribution rates for patients. In most cases, doctor visits, prescriptions, emergency room visits and hospital stays are paid by the patient at a fixed rate, called a co-pay. In some cases, this fee may instead be a fixed percentage of the total bill. Patients may be required to choose a primary care physician and the co-pay for visits to this physician is usually lower than for visits to specialists. Patients may also have a deductible, a fixed amount they have to pay on an annual basis before the insurance starts covering expenses.
Often, a managed care network will have layers. Preferred, or “in-network,” providers are often those who have agreed to accept a lower fee for services, and the patient’s co-pay is generally the lowest for these physicians and facilities. Non-preferred or “out of network” providers either refused to contract with the insurance company or charged a significantly higher fee for services. Use of these providers and services generally results in a higher co-pay for the patient or may not be covered at all. A similar situation exists with prescription drugs.
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