The use of a “manager” to control utilization of medical services and control costs.
The main point is that behavior of providers and patients is “managed.”
Forms of managed care often include peer review panels, pre-approval procedures for surgery, case management for the chronically ill, formularies limiting pharmacy reimbursement to an approved list, and other contractual provisions.
Managed care organizations emphasize creating structures that enhance control and management of the financing and delivery of health services.
World Health Organization. European Observatory on Health Systems and Policies. Glossary. 2009.
Managed care plans are health insurance plans that contract with health care providers and medical facilities to provide care for members at reduced costs.
These providers make up the plan's network. How much of the care the plan will pay for depends on the network's rules. Restrictive plans generally cost less; more flexible plans cost more.
There are three types of managed care plans:
• Health Maintenance Organizations (HMO) usually only pay for care within the network. The primary care doctor coordinates most of the care.
• Preferred Provider Organizations (PPO) usually pay more if the patient get care within the network, but they still pay a portion if he/she goes outside
• Point of Service (POS) plans let the patient choose between an HMO or a PPO each time he/she needs care
This is information from a high income country, but it may be also useful for countries in other socio economic levels.