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Managed care is a simple way to control health insurance costs. In the 1990s, health care costs increased dramatically. Insurers, in an attempt to control their risk, sought a means to control the way in which subscribers used health care services. This was achieved by many managed care plans requiring prior authorization for certain types of services.
For example, if you go to the hospital emergency room and the physician determines that you need to be admitted to receive proper treatment, a managed care plan will require that the hospital contact the insurance company and request an authorization to admit you. Without the authorization, despite how truly necessary the admission and medical care might be, your insurance company can deny payment to the hospital. Most doctor's offices and inpatient care facilities have become accustomed to the process of dealing with managed care, in order for them to receive payment and for patients to receive full benefits, and have a team of full-time staff dedicated to obtaining insurance verifications and authorizations.