What is Managed Care Plan?

This is a type of policy under which the insurance company plays an active role in facilitating the insured healthcare activities. It is responsible for the health of a group of enrollees (can be a health plan, hospital or a physician group). Managed care organizations generally negotiate agreements with providers to offer packaged health care benefits to covered individuals. Managed plan enrollees receive care from a primary care provider that is selected from a list of participating providers. The Primary care provider is responsible for supervising and co-coordinating health care services for enrollees and preauthorizing referrals to specialist and inpatient hospital admissions (Except emergencies).

The important features of Managed Care are:

• The liability of the insured is always a prefixed amount.
• A participating provider most often renders the service.
• Referral / Authorization plays major role here.

Six Managed Care Models: Managed Care can be categorized into six models.

1. Exclusive Provider Organization (EPO)

2. Integrated Delivery System (IDS)
3. Health Maintenance Organization (HMO)
4. Point of Service Plan (POS)
5. Preferred Provider Organization (PPO)
6. Triple Option Plan (TOP)

1) EPO PLAN: EPO Plan provides benefits to subscribers if they receive services from network providers. 

Primary Care Physician plays a major role here

EPOs are regulated by state insurance plans.

2) INTEGRATED DELIVERY SYSTEM: IDS is an organization of affiliated providers sites (Physician Groups, Hospitals, etc.,) that offer joint health care services to subscribers.

3) HEALTH MAINTENANCE ORGANIZATION: An HMO is a comprehensive managed care plan that pays only for in-network care.  HMO provides preventive care services to promote “Wellness” or good health, thus reducing the overall cost of Medical Care.

Annual physical examinations are encouraged for the early detection of health problems. If you need care from a physician specialist in the network or a diagnostic service such as a lab test or x-ray, your primary care physician (PCP) will have to provide you with a referral. HMO often requires patients to pay a Copayment/Copay (A fee the policyholder pays for an office visit, specific treatment or prescription), which is a fee paid by the patient to the provider/doctor at the time health care services are rendered.

4) POINT OF SERVICE PLAN: A Point of Service is a combination of HMO and the PPO. POS plans allow the covered person to choose to receive a service from Participating or Non-participating provider.

A POS plan also allows to choose a provider who is not in the network. However, if you choose to out-of network for your care, then you have to pay more deductible & Co-insurances.

If you need care from a physician specialist out side the network and if primary POS physician make referrals, then some compensation will be offered by your health insurance company.

5) PREFERRED PROVIDER ORGANIZATION: PPO is a network of physicians and hospitals that have joined together to contract with insurance companies, employers or other organization to provider health care to subscribers for a discounted fee.

PPO will cost a little more because it provides greater flexibility in choosing doctors and seeing specialists than does the HMO. The patient can see any doctor or visit any hospital of their choice. When the patient goes to no-participating or out of network providers, then he/she has to pay higher deductible & Coinsurance, Premiums, Co-pays etc.,

6) TRIPLE OPTION PLAN: Triple Option Plan is usually offered by either a single insurance plan or as a joint venture among two or more insurance carriers, providers, subscribers or employees with a choice of HMO, PPO, or Traditional fee-for-service plan.

The indemnity plan, even though more costly, would provide the patient with the greatest number of choices among physicians and hospitals. The PPO would allow the patient to have more choices among physicians and hospitals than the HMO and would not require the patient to go through the primary care physician or gatekeeper, as the HMO requires. The HMO would be the lowest cost option (no deductible) but the most restrictive as to the patient's choice.


Triple Option Plan is also called a Cafeteria plan because of different benefit plans and extra coverage options provided through the insurer or third party administrator.