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* Co-payments are pre-determined, thus you always know how much you will be paying out-of-pocket for services.

* Older adults who are on limited incomes, but are not eligible for Medicaid, are able to obtain insurance coverage.

* Much of the paperwork is eliminated.

* Quality of care issues have been brought to the forefront. Physicians and other health care providers are now more aware of the type of care they provide and the outcomes of that care.

* Some limited prescription drug benefits are offered by the plans. However, they usually use a formulary that consists primarily of generic drugs.

* Cost of managed care is usually less than indemnity plans for seniors and for other persons.

* Some services may be offered which indemnity plans do not offer, such as eye exams, eyeglasses, dental care or other services.

* Older adults sign over their Medicare benefits to the health maintenance organization. The health maintenance organization collects a sum of money each month to provide care to the individual from Medicare. The individual can only see physicians that are approved by the health maintenance organization.

The disadvantages of managed care plans include:

* Services are limited based upon what the payor agrees to pay. For example, employers will usually outline the number of visits or the amount of money they will pay for certain types of procedures. Medicare beneficiaries are, theoretically, entitled to the same benefits that Medicare provides. However, the review for "medical necessity" is more highly scrutinized and services are usually more limited in managed care.

* Individuals may have to change physicians since all physicians do not participate in all managed care plans and many physicians will only take a limited number of patients with a specific managed care organization.

* Benefits are usually more limited than those in an indemnity plan -- number of therapy visits, days in the hospital, etc.

* Some managed care plans are "risk contracts". The providers (physicians, hospitals, labs, etc.) share the risk of caring for the individual.

* Most plans use generic drugs that have a 20% tolerance for bioequivalency to name brand drugs.

* Specialist care and sub-specialty care may not be available through the managed care plan, because these physicians may not participate in managed care plans.

How a risk contract with a managed care organization works:

The managed care organization receives a certain amount of money from the payor (employer, Medicare, private individual) for each insured patient. The managed care organization gives a certain amount to the physicians, another amount to the hospital, and so on, for a specific number of patients. The providers agree to take care of these patients for the amount of money they receive. If the costs to the providers are greater, they absorb the loss. If the costs to the providers are less, they keep the "excess" for profit. Some people believe this system provides an incentive to the health care system to "treat less" because the providers make more money if they don't treat.

The primary care physician must approve all health care and can, theoretically, limit access to specialists, tests and expensive medication. Sometimes, protocols used by primary care physicians for specific diseases may not reflect the current technology and therapies that a patient would receive from an indemnity plan, a private practitioner or a specialist.

See our publications order form for a checklist on "Choosing a Health Maintenance Organization" and a copy of "Knowledge: The Key to Getting the Health Care You Need in a Managed Care World" developed by the Colorado Patients Rights and Responsibilities Consortium in Managed Care.