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Pros and Cons of Managed Care Plans

Pros and Cons of Managed Care Plans

Managed care plans are a multifaceted type of health insurance that are contracted by the health providers and other medical facilities to offer patient’s care usually at reduced costs. Since there are different providers, there also exists different plans and network. Basically, the managed care plans that restricts ones choices are less expensive as compared to the flexible plans. This means that those people who want customized plans, they are liable to pay more since the provider has to device strategies of meeting their demands. There are three types of managed plans which include (HMO) health maintenance organizations, PPO (preferred provider organizations), and POS (point of service) (Wagner, 2001). The health maintenance organization is a managed care plan that provides treatment on a fixed monthly fee which is usually on a prepaid basis. Under this type of plan, an individual is liable to a wide range of services that the provider gives and therefore regardless of the amount, the services provided by the network are covered. Upon payment of this fee, an individual may enjoy services including home visits, consultations, surgery, and hospitalizations among others. Under this plan, the primary physician provides all the care and in case a specialist is needed, he/she must be consulted first. It is therefore less costly as compared to other insurance types. Pros and Cons of Managed Care Plans


The preferred provider organizations on the other hand are a managed care system whereby hospitals or a group of doctors provides medical services at a discounted rate. PPO may be provided by an individual insurance, one or several employers, or other organizations and the PPO physicians provide cover to the policy holders and members at discounted rates (Claxton, 2010). The sponsors or the Employers therefore create incentives whereby the policyholders can be able to use the physician’sfacilities that are provided within the network/plan (Gabel & Ermann, 985). Under this method, members pay for the services as they occur and the sponsor reimburses the cost of the treatments less out of their pocket. The physician usually bills the charges directly to the insurance company or the sponsor whereby the charges are pre-negotiated between the two parties. Point of service is a managed care plan whereby the combination of the PPO and the HMO are utilized. Under the method, only a minimal copayment is paid to the service provider. One choses the provider of choice who will be responsible for the referrals and treatment. For the purpose of this study, the managed care plan that will be chosen is the preferred provider organizations, where emphasis will be put on the advantages and disadvantages of the system, the management of the plan as well as the possible innovations and recommendations that could be made to the plan. Pros and Cons of Managed Care Plans

Merits and demerits of PPO

These type of managed health care plans are among the most preferred types of insurance because of their features that make them attractive as compared to others. Despite this fact there are also disadvantages that make it impossible to undertake the plan as will be discussed below. One of the main advantages of PPO is its flexibility. Unlike other plans, PPO allows its members to visit any physician of their choice when they are faced with health issues (Chen et al., 2010). This means that they can visit any medical facility so long as it is within the coverage network and get their preferred treatment. Flexibility therefore allows them to have an added advantage in case of emergencies since no need for a primary physician is needed to be consulted before seeing other doctors.

As indicated in the flexibility option, the insurance allows the members to schedule appointments and receive specialist’s treatment without first obtaining the primary care referral (Lynn, et al., 2007). This option simplifies issues and leads to faster treatment since a specialist can be contacted immediately. It is also effective in the sense that there will be reduced costs for visiting the primary care physician/doctor. Another advantage of this type of coverage is that it allows its members to receive treatment out of network treatment. This means that the policy holders can receive treatment from any doctor regardless of the managed care affiliation.

After selecting the primary care physician, an individual is not tied up to the physician’s services. At the same time, the fees that one is supposed to pay are as a result of pre-negotiation between the healthcare providers and the sponsors. This means that the amount is usually less than what a health provider would pay if someone did not have a plan.

Despite the advantages associated with POP, various drawbacks are present with the system and these include deductibles. One of the biggest drawbacks of the system is that any treatment not provided by the network physician will not be covered paid by the plan. At the same time, the issue of co-insurance is an issue since any balance that the sponsors leave must be covered by the policy holders

To make PPO attractive al through, some innovations ought to be employed that include allowing the members to access services from a non-network providers then negotiating with them on sharing the treatment cost. At the same time, the deductibles and the co-insurance costs could be made practical so that the policyholders can be able to have other treatment options. Pros and Cons of Managed Care Plans

Management of a PPO and recommendation

Under this method, the insurance lies between HMO and a free for service plan where care is managed and also restricted but with one given the option of having several providers. Fixed instalments are paid under the plan for the insurance to cover the policyholder. At the same time, a primary care physician is not required since one can have several health facility options.


Gabel, J., & Ermann, D. (1985). Preferred provider organizations: performance, problems, and promise. Health Affairs, 4(1), 24-40.

Lynn, J., Baily, M. A., Bottrell, M., Jennings, B., Levine, R. J., Davidoff, F., & James, B. (2007). The ethics of using quality improvement methods in health care. Annals of Internal Medicine, 146(9), 666-673.

Chen, J. Y., Tian, H., Taira, J. D., Hodges Jr, K. A., Brand, J. C., Chung, R. S., & Legorreta, A. P. (2010). The effect of a PPO pay-for-performance program on patients with diabetes. The American journal of managed care,16(1), e11-9.

Claxton, G., DiJulio, B., Whitmore, H., Pickreign, J. D., McHugh, M., Osei-Anto, A., & Finder, B. (2010). Health benefits in 2010: premiums rise modestly, workers pay more toward coverage. Health Affairs, 29(10), 1942-1950.

Wagner, E. R. (2001). Types of managed care organizations. The managed health care handbook. 4th ed. Kongstvedt PR, editor. Gaithersburg (MD): Aspen Publishers, 28-41. Pros and Cons of Managed Care Plans



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