The term managed care was first introduced sometime around the late 1920s and refers to a system of medical care based on prepaid contracts. Managed health care did not become popular until the 1980s when the skyrocketing cost of health care demanded widespread change. Until then, the traditional style of health care made patients pay when they had a service performed. This is referred to as fee for service. Health and Maintenance Organizations or HMOs came about with the implementation of the federal Health Maintenance Organization Act of 1973. This law made most U.S. states have an overall standard of health insurance. These federal standards said an HMO "had to provide a comprehensive set of medical services for a prepaid fee with minimal co-payments and could not deny coverage to patients with preexisting illnesses."
Organized mainly in two ways, the first type of HMO is typically called a group practice. This is the type of HMO that has doctors and other health-care related services, along with hospitals, available at its own location. It is not unusual that some of these locations are even owned by the federal government, which in turn has its own group practices. There is current criticism of this practice as some perceive it is unethical for the government to gain monetarily from laws they enact.
Health-care providers may be either independent contractors or workers within an HMO. Some of these types of HMOs are referred to as staff model HMOs. The other, known as independent practice, provides services via a contractual relationship, whereby doctors, health-care providers and hospitals are in private practice. Typically, doctors who participate in HMOs get paid a flat rate whether a patient uses their services or not. The fixed fee is paid out to them on a monthly basis. HMOs enroll as many people as possible and make it common practice to pay out as little as possible. This is one way they primarily continue to make huge profits. They reduce costs by providing very little service while increasing premiums every year.
Tags: health care, Health Maintenance