Managed care is a term used to describe a health insurance plan or healthcare system that coordinates the provision, quality, and cost of care for its enrolled members. When you enroll in a managed care plan, you select a regular doctor, called a primary care practitioner (PCP), who will be responsible for coordinating your health care. Your PCP will refer you to specialists or other health care providers or procedures as necessary. It is usually required that you select health care providers from the managed care plans network of professionals and hospitals. Managed care plans pay the health care providers directly, so enrollees do not have to pay out-of-pocket for covered services or submit claim forms for care received from the plans network of doctors. However, managed care plans can require co-pays paid directly to the provider at the time of service.

Managed care is used in both public and private health insurance programs, including Medicaid and Medicare. Medicaid managed care provides for the delivery of Medicaid health benefits and additional services through contracted arrangements between state Medicaid agencies and managed care organizations (MCOs) that accept a set per member per month (capitation) payment for these services. By contracting with various types of MCOs to deliver Medicaid program health care services to their beneficiaries, states can reduce Medicaid program costs and better manage utilization of health services. Improvement in health plan performance, health care quality, and outcomes are key objectives of Medicaid managed care. Medicare managed care includes a combination of risk- and cost-based plans. Risk-based plans receive a fixed prepayment per beneficiary per year, while cost-based plans receive a payment based on the actual cost of providing services to beneficiaries. Medicare enrollees can choose to enroll in a managed care program (if available) or to receive services on a fee-for-service basis.