The idea behind managed care is that doctors and hospitals can use standardized, cost effective regimens and treatment protocols when presented with patients who have certain underlying conditions. Patients sign up for healthcare in a managed care insurance system, trading their dollars for treatment when they become ill or injured. The insurance system is built to look for, and in many cases enforce, a cost basis for certain illnesses and conditions based on established treatment protocols.
In other words, if you show up at the hospital with appendicitis, the insurance company can predict what the costs are for treating you and sending you home. If a doctor did a particularly fine job of sewing you back together and wants to charge a little more, too bad.
Managed care makes sense because normally, most appendectomies take about the same time, use the same equipment, require the same staff, and have a certain recovery period. Quantify that in dollars and time, and you have managed care.
The problem is that now doctors and hospitals have a whole new set of rules to follow in dealing with patients trough a managed care system. Mistakes happen in billing for services, and disputes can arise among doctors, hospitals, pharmacies, physical therapists, patients and insurance companies. It gets complicated. And it can take a mind numbing amount of time to sort things out, something that healthcare organizations do not have.
So they bring in specialists who can monitor managed care contract compliance, perform managed care reviews, do payment reviews that can amount to revenue recovery, and ensure payment compliance. They take the detail work away so healthcare specialists can do their jobs.