What are the benefits of managed care?

Managed care refers to a system that integrates the financing and delivery of healthcare services to patients in order to control costs and improve quality. Managed care organizations (MCOs) contract with groups of providers to form networks that patients must use to receive coverage. There are many potential benefits of the managed care model:

Cost Savings

One of the main goals of managed care is to reduce unnecessary healthcare spending. MCOs use various strategies to control costs:

  • Negotiated Provider Discounts – MCOs leverage their large patient pool to negotiate lower reimbursement rates with doctors, hospitals, and other providers.

  • Utilization Management – Requirements for referrals and pre-authorizations ensure only necessary, cost-effective services are utilized.

  • Emphasis on Preventive Care – Keeping patients healthier from the start avoids more expensive treatments down the line.

  • Prescription Oversight – Promoting use of generic drugs and requiring substitutions saves on high-cost medications.

  • Reduced Fraud – Tighter billing oversight helps detect and prevent fraudulent claims.

  • Administrative Efficiency – Consolidated billing, enrollment, and claims processing creates economies of scale.

Studies show managed care delivers healthcare at 10-40% lower cost compared to unmanaged fee-for-service arrangements.

Predictable Premiums

MCOs are paid fixed monthly premiums per enrolled member. This means the costs are predictable for purchasers of insurance like employers or government programs. Premiums do not fluctuate greatly year-to-year, facilitating stable budgeting.

Coordinated Care

MCOs coordinate care in order to improve quality and treat patients holistically:

  • Designated PCP – Having a primary doctor oversee a patient’s various conditions and specialists helps reduce duplicated services and medical errors.

  • Integrated Records – Shared documentation between providers gives them a more complete picture of the patient for better care.

  • Case Management – Complex cases are assigned a case manager to ensure the patient follows care plans and treatment is aligned across their care team.

  • Disease Management – Those with chronic illnesses may have customized education and support programs to control their conditions.

  • Utilization Review – Identifies gaps or inappropriate treatments so patients get proper levels of care.

  • Holistic Focus – Looks at a patient’s total health needs beyond just medical to include behavioral, social, and mental health factors.

Quality Improvement

MCOs use data analysis, financial incentives, and performance feedback to drive higher quality:

  • Outcomes Monitoring – Systematically tracking metrics identifies opportunities for improvement.

  • Treatment Standards – Implementing care guidelines based on scientific evidence encourages best practices.

  • Provider Profiling – Collecting and comparing individual provider performance data promotes accountability.

  • Pay-for-Performance – Rewarding providers who meet quality benchmarks gives financial motivation.

  • Public Reporting – Publishing plan and provider quality ratings puts reputational pressure to improve.

  • Peer Review – Having doctors evaluate each other’s care decisions furthers adoption of optimal practices.

These managed care techniques have been shown to reduce hospital readmissions, lower infection rates, and improve preventive care rates compared to unmanaged settings.

Access to Specialists

Patients have access to a wide range of specialists through MCO provider networks:

  • No Referral Needed – MCOs like PPOs allow patients to self-refer to network specialists, making access easy.

  • Large Provider Pool – The national reach of major MCOs allows them to build extensive provider networks.

  • Online Provider Directories – Make it simple for patients to search for doctors by specialty, location, hospital affiliations, and more.

  • Credentialing Standards – MCOs credential providers thoroughly, giving patients confidence in the quality of network specialists.

  • Performance Data – Collecting and publishing stats on timeliness of access and other metrics applies pressure on specialists to accept new patients.

Patient Resources

MCOs offer many resources to support patients and improve outcomes:

  • 24/7 Nurse Advice Lines – Speak to a registered nurse anytime about health concerns, triage symptoms, and receive self-care advice.

  • Virtual Visits – See providers online via phone, video chat, or messaging for convenient minor illness and preventive care.

  • Health Education – Newsletters, workshops, websites, and apps provide content to help patients better manage conditions and wellness.

  • Wellness Tracking – Online personal health records allow patients to monitor preventive tests, immunizations, medications and more.

  • Health Assessments – Questionnaires help identify patient risks, customize care plans, and uncover unmet needs.

  • Lifestyle Coaching – Programs provide motivation and support to quit smoking, lose weight, and meet other health goals through caring professionals.

Focus on Prevention

MCOs emphasize preventive services to detect issues early, avoid hospitalizations, and keep patients healthier:

  • Covering preventive care like immunizations, cancer screenings, annual check-ups and health education fully with no out-of-pocket costs.

  • Sending reminders to patients when they are due for preventive tests and services.

  • Implementing targeted outreach to encourage those behind on services to get caught up.

  • Evaluating provider performance on prevention metrics like breast cancer screening rates.

  • Removing barriers to access through online scheduling, extended hours for working patients, and mobile preventive clinics.

Investing in prevention reduces downstream disease burden and ultimately lowers MCOs’ costs.

Innovative Benefits

MCOs often provide value-added supplemental benefits beyond standard covered services:

  • Transportation – Provides free rides to doctor appointments for patients with mobility issues.

  • Meal Delivery – Offers healthy prepared meal delivery after hospital discharges to support recovery.

  • Vision Services – Covers vision exams and corrective eyewear to improve sight and related conditions.

  • OTC Products – Allows fixed dollar amounts for over-the-counter medications and health items not typically covered.

  • Fitness Tracking – Provides activity trackers to help members exercise consistently.

  • Dental Care – Adds adult dental benefits such as cleanings, fillings, and tooth extractions that are not normally included.

  • Prenatal Support – Offers programs with nutritional guidance, health coaching, and resources to encourage positive birth outcomes.

These extra benefits improve access, address social determinants of health, and ultimately support better patient outcomes.

Satisfaction Guarantees

Some MCOs tout member satisfaction guarantees:

  • Prompt Payment – Providers are reimbursed within a few weeks to maintain positive business relationships.

  • Appointment Access Standards – Strict metrics ensure members can readily book appointments and access care when needed.

  • Short Hold Times – Call centers are staffed sufficiently to minimize time on hold when members phone in.

  • Limited Claims Denials – High claims auto-adjudication rates and low denial rates ease provider administrative burdens.

  • Prompt Complaint Resolution – Issues raised by patients or providers are researched and resolved quickly.

  • Member Rewards – Cash or gift incentives reward patients for engaging in primary, behavioral, and preventive care.

Meeting defined performance guarantees around these areas promotes patient and provider loyalty.

Convenient Technology

MCOs offer a variety of technologies aimed at simplifying processes:

  • Online Provider Directories – Search for doctors and facilities that meet your preferences.

  • Price Estimation Tools – Calculate expected costs for tests, procedures, and episodes of care.

  • Virtual Visits – See doctors over phone, video chat, or messaging apps when appropriate.

  • Digital ID Cards – Carry digital versions on your smartphone instead of paper cards.

  • Self Service Apps – Manage your policy, benefits, authorizations, and claims through phone apps.

  • Online Insurance Card – View your current ID card details and order replacements online.

  • Electronic Claims Submission – Submit and track claims electronically instead of on paper.

  • Text Reminders – Opt to receive appointment reminders, medication alerts, and preventive care nudges via text.

Technology makes accessing benefits simpler for patients while also streamlining administrative processes.

Increased Patient Choice

While MCO networks are more limited than open-access plans, they still offer large provider pools and varied plan designs for patient choice:

  • National Insurers – Allow members flexibility to access coverage across different states and regions.

  • PPO Networks – Require no referrals and allow coverage for out-of-network care to preserve choice.

  • Plan Options – Range from low premium/high deductible plans to high premium/low deductible plans to meet budget needs.

  • Online Provider Reviews – Enable informed decision-making by reading about other patients’ experiences.

  • No Primary Assignment – Patients can often

Managed Care Plans | All About Medicare Advantage


What is the main purpose of managed care program?

The overall goal of managed care plans is to reduce costs for members while improving the quality and outcomes of their care.

What are the two purposes of managed care?

The term “managed care” is used to describe a type of health care focused on helping to reduce costs, while keeping quality of care high. The most common health plans available today often include features of managed care. These include provider networks, provider oversight, prescription drug tiers, and more.

What is the important characteristic of managed care?

Main Characteristics of Managed Care MCOs manage financing, insurance, delivery, and payment for providing health care: Premiums are usually negotiated between MCOs and employers. MCOs function like an insurance company and assume risk. MCOs arrange to provide health care, mainly through contracts with providers.

What is the impact of managed care on the US healthcare system?

The presence of managed care organizations in a health care market may also generate competitive pressure that influences treatment patterns for patients market-wide. In the commercial health insurance market, managed care organizations compete among themselves and with other types of insurers for enrollees.

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