Managed Care Defined

MCOL has defined Managed Care as follows:

• Managed care is a complex system that involves the active coordination of, and the arrangement for, the provision of health services and coverage of health benefits.
• The most common types of Managed Care Organizations (MCOs) include Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs)
• Managed care usually involves three key components: oversight of the medical care given; contractual relationships and organization of the providers giving care; and the covered benefits tied to managed care rules.

The term "managed care" was coined in the 1980's to provide an umbrella concept for HMOs, newly emerging PPOs, the provider delivery systems that contract with such health plans, and the techniques and models used by these organizations in coordinating the delivery of care. Modern PPOs emerged in the 1980s. The term HMO was coined in 1970, but the genesis of HMOs date back to prepaid medical care for specific employee populations that were developed in the 1920s and even before.

Managed Care has for the past several decades been associated with reform of a previous paradigm of traditional health care delivery, and more recently also with Backlash regarding the conflicts caused between managing the costs of care, versus the direct relationship between patients and providers, and the outcomes desired by all parties involved. In this context, it might be relevant to consider a cosmic law often quoted by Uwe E. Reinhardt, Ph.D. and other noted health care thought leaders.

Cheng Tsung-mei's Cosmic Laws of Health Care, named after an astute Chinese observer of health-reform movements around the world:

The First Cosmic Law of Health Care
At any time, anywhere on the globe, people will complain about their nation's health system, regardless of the percentage of the gross domestic product that the nation spends on health care, and regardless of the system's financial and administrative structure.

The Second Cosmic Law of Health Care
At any time, anywhere on the globe, there will be demands for a major reform of the nation's health system.

The Third Cosmic Law of Health Care
At any time, anywhere on the globe, the last health reform will be said to have failed.

Source: Uwe E. Reinhardt, "International Perspectives on Health Reform," in Sheila Burke, Eric Kingson and Uwe Reinhardt, eds. Social Security and Medicare: Individual vs. Collective Risk and Responsibility, Washington, D.C.: National Academy of Social Insurance, 2000, pp. 161-82.