What is managed care, or HMO as it is more commonly referred? An HMO, also known as a health maintenance organization, is an organization that provides comprehensive health care to voluntarily enrolled individuals and families in a particular geographic area by member physicians with limited referral to outside specialists and that is financed by fixed periodic payments determined in advance. (Merriam-Webster's Dictionary) .
Managed care has its origins in efforts to improve access to health care. At its best, managed care can provide excellent care. In general, managed care does a better job than the traditional fee-for-service system in ensuring that consumers get preventative care and in curbing the overuse of unnecessary tests and procedures. Managed care also has the potential to coordinate care, minimizing conflicts between treatments or prescriptions authorized by a patient's various physicians. It is also generally acknowledged that managed care has succeeded in cutting health care costs, although there are many who believe that many managed care plans have gone too far in their drives to bring costs down. .
HMOs were once considered the greatest saviors of the U.S. healthcare system. They emerged during a time of soaring medical costs with the intention of boosting the quality of healthcare while holding prices down. Today, however, a growing customer backlash against HMOs' level of care has led Congress to seriously consider allowing patients to sue their provider. .
HMOs have introduced an innovative way to provide health services: incentives for doctors not to treat patients. The less a physician practices, the more the company makes. HMOs make money by not providing a product. (Physicians Who Care, Internet 1999) Consumers are being nudged into them by their employers, in an attempt to hold down costs, and out of traditional insurance plans, in which the insurer reimbursed the patient directly and covered most of the cost of medical treatments.