A managed care agreement is a contract between a healthcare provider and an insurance company. This agreement outlines the terms and conditions of payment for medical services.
In a managed care agreement, an insurance company agrees to pay for medical services to its members who are treated by healthcare providers who have agreed to certain terms and conditions. These terms and conditions include the level and type of medical services that will be provided, as well as the amount that the healthcare provider will be paid for each service provided.
The goal of a managed care agreement is to control the cost of healthcare. By partnering with healthcare providers and setting requirements for the care they provide, insurance companies are able to negotiate lower prices for services. Healthcare providers are often willing to agree to these terms in order to gain access to a large pool of potential patients and to reduce administrative and billing costs.
Managed care agreements typically fall into two categories: Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs).
HMOs typically require members to choose a primary care physician who serves as a gatekeeper to all other medical services. In order to see a specialist, a referral from the primary care physician is required. HMOs often have lower out-of-pocket costs for members but also limit their choice of healthcare providers.
PPOs, on the other hand, allow members to see any healthcare provider within the network without a referral. PPOs generally have higher out-of-pocket costs but provide more choice and flexibility in choosing healthcare providers.
Managed care agreements have become increasingly popular in recent years as healthcare costs have continued to rise. By partnering with healthcare providers and setting standards for care delivery, insurance companies are able to provide affordable healthcare to their members while controlling the cost of services. As a result, managed care agreements have become an important tool for both healthcare providers and insurance companies alike.