How do managed care plans typically limit expenses?

Managed care plans primarily limit expenses by employing a network of providers. This approach involves creating a set of contracted healthcare providers that members must use to receive the highest level of benefits. By working within this network, the plans can negotiate better rates with providers, leading to lower overall costs. These negotiated rates typically translate into reduced prices for services compared to what would be charged outside of the network.

When members utilize in-network providers for their healthcare needs, managed care plans can more effectively manage patient care, monitor quality outcomes, and control the costs associated with services. This structured approach helps to keep premiums more affordable for both the insurer and the insured.

While other mechanisms, such as charging deductibles, limiting out-of-network coverage, or increasing co-payments, might also be used by managed care plans to manage costs, the network of providers is a fundamental strategy that directly impacts the overall expenses by enabling cost control and effective management of care.