Those under contract become linked into a network that provides services to plan members. The plan is paid per person rather than for each visit or each type of service. Whether the member never sees the doctor or makes 20 visits, an employer contracts with a plan to pay this fixed per member charge for its employees. Medicaid and Medicare programs also sign contracts with these plans. Managed care plans also control costs by setting criteria for selecting providers and by establishing formal programs to monitor the amount and quality of care being given.
Utilization review is one common monitoring strategy.
Except for emergencies, doctors are often required to get approval from the plan before hospitalizing a patient or before providing expensive tests and procedures. Much less is known about other managed care models, but research shows that HMOs are achieving cost savings. They do this by controlling and managing both the use and the provision of services. While this is one advantage to managed health care, critics point to disadvantages. Critics argue that managed care may result in too few services being provided.