Home > West's Encyclopedia of American Law > Managed Care

A general term that refers to health plans that attempt to control the cost and quality of care by coordinating medical and other health-related services.

The U.S. HEALTH CARE system has undergone major structural changes since the 1970s. The traditional way of obtaining medical care has been for a patient to choose a doctor and then pay that doctor for the services provided. This "fee-for-service" model, which has been financially rewarding for doctors, gives the patient the right to choose a physician. But the fee-for-service model underwent a rapid decline in the 1980s and 1990s as the concept of managed care took hold in the health care industry.

Managed care is a new term for an old medical financing plan known as the HMO, or health maintenance organization. HMOs are not insured plans. They are prepaid health care systems, offering services to which the member is entitled, as opposed to a dollar amount guaranteed by an...