What is Managed Care?
Last updated: August 2021
To meet everyone's healthcare needs, there are many different kinds of healthcare plans. These plans can be run by private insurance, Medicaid, or Medicare. With Alzheimer's, managed care can help families tap into resources and services that can help to support a loved one through the progression of the disease.
There are also plans for those who qualify for both Medicare and Medicaid (often referred to as "dually eligible"). The most common healthcare plan for those on Medicaid is managed care. Over two-thirds of all those who receive Medicaid benefits are on a managed care plan. This number has been rising steadily and continues to rise.1
How does managed care work?
Managed care is a health insurance plan that focuses on balancing coverage and cost. It is specific to Medicaid. However, those who qualify for both Medicare and Medicaid may have access to these plans. State Medicaid agencies contract and work with managed care organizations (MCOs) to decide which services will be offered and by which organizations. An organization could be a specific doctor, physician group, hospital, or healthcare system.2
This means that managed care programs cover a set of doctors and hospitals. There are also specific services covered. Managed care may not cover visits to other doctors or other services outside of the network typically outlined in the MCO's contract with the state.2
Managed care focuses on primary care and preventive care. These are things that your family doctor or general practitioner often asks you about. Primary care focuses on your overall wellness. Preventive care focuses on making healthy choices that keep you from developing diseases.1
Because of this, more states are expanding their managed care programs to cover more services. This would open the programs to those living with more complex healthcare needs. This expansion includes behavioral health services, pharmacy benefits, and long-term support.1
How is managed care paid for?
Managed care is paid using the capitation model. Capitation is a system in which managed care organizations receive a certain amount of money per person per month.1
The opposite of capitation is fee-for-service. Instead of paying a set price every month, insurance plans pay a set price for each service that a provider performs for you. With this model, the healthcare organization will only receive money if they provide you with medical services like visits, procedures, and tests.1
Why was it created?
In the 1990s, more healthcare plan options were created as an alternative to fee-for-service.3 Managed care was created at the same time. The goal of this system is to create a plan that balances cost, medical service use, patient choice, and quality of medical service. Also, states need a way to reliably decide on a set fee to pay. To do this, they need to keep track of how much money needs to be set aside to cover everyone on the plan. They also need to make sure that every person is receiving the proper services they need.
By creating contracts with specific hospitals and networks, Medicare can keep down costs. This also helps to keep track of which services people use by covering a specific list of supports.4
Alzheimer's and managed care, what it means for you
At the end of the day, managed care exists to control healthcare costs for those on the plan. It also helps older adults age in place. It allows them to access the healthcare they need without moving toward assisted living or nursing homes if that is their wish.
Nearly every state has managed care programs. However, 11 states currently do not, including:5
- North Carolina
- South Dakota
If you would like to learn more about your insurance options, reach out to your local Area Agency on Aging. You can also reach out to your state’s Department on Aging. They will be able to provide clear guidance on what is available in your area.