Managed care refers to methods or programs used by health insurance companies to control medical cost. A common characteristic of managed care organizations is that they manage to lower costs for its members or policyholders by buying services in bulk. What this means is that they pay doctors and hospitals bulk prices, passing on the savings to their policyholders.
The most glaring downside of managed care is that health plans of this kind offer limited choices, from hospitals to doctors and even tests and medicines. Policyholders that opt to get health care outside of the provider network ends up having to shoulder most or all of the medical bill incurred, even if the only reason for not going to an outside provider is lack of accessibility or an emergency. Despite this, the difference in cost from traditional health care methods (i.e. fee-for-service) still makes managed care plans very much widely used.