courtesy of the Children's Medical Center of Dallas

How Does Managed Care Save Money? Unlike traditional plans, managed care plans contract directly with health-care providers to set payment for services. To join a provider network, most doctors and hospitals give managed care plans a discount from their standard fees. Managed care plans then offer their enrollees incentives - such as lower out-of-pocket costs - to use the health-care providers who are in the network. Managed care plans also keep costs down by restricting the use of more costly services such as hospital care.

Why the Change From Traditional Insurance
to Managed Care? Cost is the main reason. Faced with rising healthcare expenses, employers are shifting to managed care plans to help keep their health-care costs under control.

What are the Different Types of Managed Care Plans? There are two basic types of managed care plans: Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs). The main difference between these two plans is that HMOs require their enrollees to receive all of their care from within the plan's network, while PPOs give enrollees the option of using providers either within or outside of the plan's network of providers. A third type of managed care plan, a Point of Service plan (POS), is in some ways like an HMO and in other ways like a PPO.

Health Maintenance Organization (HMO)
An HMO offers a specific list of health services for a fixed monthly fee, or premium. Enrollees must choose a primary care physician contracted with the HMO. This physician coordinates and authorizes all medical services, specialty referrals and hospitalizations.

Preferred Provider Organization (PPO)
A PPO contracts with selected doctors and hospitals in the community. PPO enrollees may use the doctors and hospitals within this network or go outside of the network for care. However, the enrollee pays more for going outside of the network. For example, a PPO might pay 90 percent of the cost for a visit with a doctor within the network but only 70 percent of the cost for a visit with a doctor outside of the network.

Point of Service Plan (POS)
A POS plan is like an HMO in that care for enrollees is managed by a primary care doctor from within the POS network. But like a PPO, POS enrollees may go out of the network for care by paying a larger share of the cost.

What Services Should a Health Plan Cover? A health plan for children should include all of the services listed below for children from birth through age 21. But keep in mind that most plans do not cover all of the services on the list. That's one more reason why it is so important to compare plans carefully.

When comparing plans, you may want to use this handy check-off list. You also may want to make copies of the list so that you will have a list for each of the plans you are comparing.

Preventive and Primary Care
- Immunizations (shots)
- Routine checkups and physical exams*
- Doctor visits for sick children
- Speech, hearing and vision tests
- Dental checkups
- Prescription (Rx) drugs
- Laboratory and X-ray services
- Health education
- Pregnancy and childbirth services
- Family planning Major Medical Services
- Consultation with doctors who specialize in treating children Hospital services in a children's hospital, if needed Diagnostic services done by those who specialize in evaluating children
- Ambulance services Special Care
- Physical, speech, occupational and other types of rehabilitation therapy Equipment and supplies, such as orthopedic devices, eyeglasses and hearing aids
- Treatment of seriously ill children at home or in a long-term care facility, and if at home, backup support for parents and caregivers
- On-going coordination of care for disabled or chronically ill children
- Hospice care for children who have a terminal illness - Counseling for emotional problems
- Treatment for substance abuse

*Well-child Checkups
All children should have at least the following number of well-child checkups:
- From birth to 12 months, 8 checkups
- 15 months to 4 years old, 5 checkups
- 5 to 12 years old, 5 checkups
- 14 to 21 years old, 4 checkups

What About Services for Children Under
Managed Care? Almost all HMOs and most PPOs offer preventative and primary care services for children, such as shots and regular checkups, at little or no additional cost. Managed care plans often take care of children's health needs in one place, and many offer convenient hours for parents. However, depending on the plan, managed care can have some drawbacks. Because managed care plans try to keep costs under control, it may be difficult to get approval for your child to see a doctor who specializes in treating children's illnesses. It may also be difficult to get special equipment, medications and long-term rehabilitation for children.

What are Some of the Major Differences Between Traditional Insurance and Managed Care?
Selecting a Health Care Provider
Traditional Insurance - You may select any doctor, hospital or other health-care provider.

PPO - You may select any health-care provider in the network. If you use a provider outside of the network, you will have to pay a larger portion of the bill.

HMO - You may only select health-care providers in the HMO network. If you use a provider outside of the network without HMO approval, you will have to pay the entire bill.

Consulting and Using a Specialist
Traditional Insurance - You may use any specialist. However, some plans require pre-approval for certain procedures performed by specialists.

PPO - You may use any specialist in the network. If you use a specialist outside of the network, you will have to pay a larger portion of the bill.

HMO - Your primary care doctor determines if you need to see a specialist. If you use a specialist without HMO approval, you will have to pay the entire bill.

Out-of-pocket Costs
Traditional Insurance - You may have to pay an annual deductible of $200 to $500. You also may be responsible for co-insurance payments of 20 percent of your medical bills, up to a certain limit (the stop-loss amount) each year. Often you pay for routine doctor visits and prescription drugs.

PPO - You may have to pay co-payments (usually $3 to $15) for network doctor visits and prescription drugs. When you use a provider outside of the network, you may have to pay a deductible, and then the plan will reimburse 70 percent of your costs.

HMO - You may have to pay co-payments for doctor visits and prescription drugs. Sometimes you will be charged co-payments for hospital stays and emergency room visits. There are usually no deductibles. Note: All deductibles and co-payments are examples based on a typical plan and may not reflect your particular choices.

How do I compare health plans?
First, make sure you have written information about each of the plans you want to compare.

Second, for each plan, make sure you understand:
- What services does the plan cover?

- Are there limits on the number of times we can use each service, such as prenatal visits and well-baby checkups?

- Are there limits on the length of time we can use each service, such as physical therapy and home health-care?

- What expenses will we have to pay, such as monthly payments, co-insurance, co-payments and deductibles?

Last, make a list of health-care services your child has needed in the past. Talk with your child's doctor about health care that will be needed in the future. Compare the services your child is likely to need with the services the plan offers.

Also, think about the unexpected. Your child may be healthy now, but if an emergency comes up, you'll want the security of knowing that the care your child needs will be there.

Why do children have unique health care needs?
Children are not just miniature adults. They respond differently to both illness and treatment, depending on their age and stage of development.

Smaller children and infants are vulnerable to sudden shifts in conditions. As a result, procedures are more difficult and medication must be more finely calibrated. Children suffer from a higher proportion of acute rather than chronic illnesses, and the types of illnesses they experience are different from the ones experienced by adults.

In addition, very young children have a limited ability to communicate their symptoms, and they also require more reassurance in treatment and more assistance with daily activities.

These differences add up to the need for specialized pediatric care in all health plans. And no organizations are better prepared to provide this care in a cost-effective manner than the nation's children's hospitals.

As a reminder, this information should not be relied on as medical advice and is not intended to replace the advice of your child’s pediatrician. Please read our full disclaimer.