As part of their strategy to increase quality-of-care and control costs, many managed-care plans require patients to choose a primary-care physician (PCP)--usually a family practitioner, internist or pediatrician--to provide basic medical care. Often PCPs play the role of gatekeeper. That is, they are responsible for determining treatment and use of specialists. Before visiting a gastroenterologist, for example, a member must first visit his or her PCP to get a referral. The aim of such an approach is to cut down on unnecessary and costly visits to specialists that may include needless and expensive tests and hospitalizations. Under the fee-for-service system, there was no need to see a PCP for a referral to a specialist, and insurance companies would reimburse the cost of the vist without question.

The gatekeeper role is often viewed as a negative one because some plan members and doctors say it restricts essential health care and has created an adversarial relationship between patients and their PCPs. Some plans assert that their PCPs are not responsible for limiting care at all but for coordinating treatment as efficiently as possible.

Does the managed care system work? According to a 12-year study by RAND--an independent research organization in Santa Monica, California--patients who belonged to HMOs experienced up to 40 percent fewer hospitalizations and saved up to 28 percent on health care costs compared to patients covered by traditional insurance plans. And there was no adverse effect on the quality-of-care the HMO members received. Additional studies have found that diagnosis and treatment results as well as mortality rates for HMO patients with serious diseases were equal to those for private patients. And while the rate of discretionary, or elective, surgery was lower for HMO patients, the rate of non-discretionary surgery (such as hernia repair) was the same for both.

Most managed-care plans achieve these lower hospitalization rates by working closely with participating physicians--reviewing their decisions before, during and after a patient's hospitalization. Except in an emergency, physicians are often required to get approval from the plan before hospitalizing a patient. Then during the hospitalization, the plan checks with the physician to make sure it is still warranted. But this system hasn't cut back enough on certain procedures. An analysis by RAND indicates that while the hysterectomy rate was uniform among HMOs, 16 percent of these operations were clearly unnecessary and an additional 25 percent were questionable.

Plans periodically review all of a physician's cases and notify him or her if too many patients seem to have been inappropriately referred to specialists. In those instances, there may be some type of financial penalty or disincentive to ordering further `unnecessary' care. Other plans examine the quality and efficiency of their physicians to identify the best practices. They then offer incentives to other health providers to adapt to the successful models.

Using financial incentives to control referrals has come under fire by critics who say physicians may become too cautious about sending a patient to a specialist if it might cost them money to do so. They also claim plans have a tendency to sever contracts with doctors who consistently cost them more money and who lobby too adamantly and frequently for services. Others, however, argue that managed care is essential to provide the appropriate level of care most efficiently. In the end, health care consumers have to be informed, ask questions and if they feel they're getting too little or too much care, climb the hierarchy and make themselves heard.