Alaska Mental Health Consumer Web

What is Managed Care?
What is now called "managed care" began in the 1940s with Health Maintenance Organizations (HMOs).  Families getting medical care at HMOs were urged to get yearly checkups, and to seek preventive care and early treatment in case of illness.  This Proved to be cost-effective.

As health care costs rose, employers, for their employees, began to sign contracts with companies offering to "manage" health care.  The managed care company organizes doctors into cost conscious groups.  Since the 1980s, more and more employee benefit programs have contracted with managed care companies.  There are now hundreds of managed care companies.  Their rules differ.  Contracts change from year to year.

In general, managed care pays for what is "adequate" and "medically necessary," using the least costly alternative.  Keep in mind:

States are now looking to the managed care industry to provide public health care, including mental health and related services.  In the past, State and local governments allowed service providers to bill Medicaid and Medicare directly, after the services were provided, on a "fee for service" basis.  With managed care, providers will be under contract with the managed care company.  The company may expect to authorize each piece of service they consider "medically necessary."

Managing care is harder than managing dollars.  For people with long-term mental illness, managed care is a new way of delivering services that has not been tried before.  This overview, for consumers of managed mental health care--and their families -- describes:

        What to Look For

        What to Ask

By Center for Mental Health Services

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                 last modified 2/15/99