What Is a Managed Care Network?

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  • Written By: Maggie Worth
  • Edited By: Jenn Walker
  • Last Modified Date: 11 September 2019
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A managed care network is a group of physicians, hospitals and other healthcare facilities that have contracted to provide services to an insurance company's clients at fixed rates. Each insurance company sets fee limits and patient contributions for each specific procedure, and all providers in the network agree to those terms. In many countries that do not offer public health care, this is the primary insurance model.

Usually, major insurance carriers contract with a large percentage of the available physicians, specialists, pharmacies, hospitals and other providers in a given area to create an extensive managed care network. When a patient is treated, he is billed for his contribution immediately and the remainder of the bill is sent to the insurance company. The insurance company reviews the bill, adjusts it according to contracts terms, sends a notice of coverage to both the healthcare provider and the patient, and pays the approved portion of the bill directly to the care provider.

A primary feature of the managed care network model is the coding system. Without it, the process would be virtually impossible to manage. Every procedure is assigned a code, and approved pricing is loaded into a computer database based on those codes. If the healthcare provider codes a bill incorrectly, it will be delayed and may be denied entirely.


In a managed care network model, the insurance company also sets patient contribution rates. In most cases, doctor's visits, prescriptions, emergency room visits and hospital stays are charged to the patient at a flat fee, called a co-pay. In some cases, this fee may be a flat percentage of the total bill instead. Patients may be required to choose a primary care physician, and the co-pay for visits to this doctor are usually lower than for visits to specialists. Patients may also have a deductible, a set amount they must pay on an annual basis before insurance begins to cover expenses.

Often, a managed care network will have levels. Preferred, or "in-network," providers are often those who have agreed to accept lower compensation for services, and the patient co-pay is generally the lowest for these physicians and facilities. Non-preferred, or "out of network," providers have either refused to contract with the insurance company or have demanded a significantly higher rate for services. Use of these providers and services generally entails a higher patient co-pay or may not be covered at all. A similar situation exists with prescription medications.


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