The United States has moved from an agricultural country, to an industrialized country and from predominately an industrialized country to more of an information and services country. Health care has changed in the way it has operated just as the country has changed. When the United States was an agricultural country, health care was operated by doctors that worked independently providing health care to patients within a set communities or counties. This health care was a fee for service system. However, that fee could often be made on a barter type system. In that system patients would trade goods for services. As the country transitioned to an industrial society, health care had transitioned as well. Health care providers set up group offices that allowed the health care providers to support each other, when necessary, in providing care to their clients. Health care has primarily focused on providing health care for the patients on a "Fee-for-Service" type payment system. Now that the country has entered in the information and services markets, health care has developed a method to transitions into the information and services markets as well. Today, health care providers have added an additional option to their clients. This option is known as Managed Care. Both of these health care payment types are available today, but managed care is starting to lead the way in the health care industry.
Fee for service is defined as a patient sees a medical provider for medical service and the medical provider will bill the health plan of the patient or the patient will pay the medical provider for services and has an option to be reimbursed by the health plan, if applicable. (Arnett & Trapneil, 1984) This was the dominant approach to paying physicians for their medical services.
Managed care is the control of utilization and cost of medical care by reviewing and monitoring, the appropriateness and extensiveness, and cost of medical services. (Ibid.) This is on a prepaid basis for coverage. Managed care is defined as:
Managing health care costs through a network of providers who have agreed to limit their charges to a certain negotiated amount and/or
Managing the type and frequency of treatment with coordination of care through a Primary Care Physician or with pre-authorization (approval by the insurance company). (PacifiCare Health Systems Incorporated, 1995)
This environment has created, and is expected to create a surplus due to the utilization of practitioners and nurse practitioners over physicians. This means that a patient must be referred to specialist before they can get services that will be paid for by the health care provider.
Fee for services was a simple system in which a physician sets a price for each type of service delivered, and then the patient or the health care plan provider paid that set price. Individuals that were not covered by a medical health care provider fell under the fee for service...