Health Maintenance Organizations (HMOs)
Health maintenance organizations are prepaid health plans. As an HMO member, insured pay a monthly premium. In exchange, the HMO provides comprehensive care for the insured & his family, including doctors’ visits, hospital stays, emergency care, surgery, laboratory (lab) tests, x-rays, and therapy.
The HMO arranges for this care either directly in its own group practice and/or through doctors and other health care professionals under contract. Usually, patient choices of doctors and hospitals are limited to those that have agreements with the HMO to provide care. However, exceptions are made in emergencies or when medically necessary.
There may be a small co-payment for each office visit, such as $5 for a doctor’s visit or $25 for hospital emergency room treatment. Individual total medical costs will likely be lower and more predictable in an HMO than with fee-for-service insurance.
Because HMOs receive a fixed fee for your covered medical care, it is in their interest to make sure patient get basic health care for problems before they become serious. HMOs typically provide preventive care, such as office visits, immunizations, well-baby checkups, mammograms, and physicals. The range of services covered varies in HMOs, so it is important to compare available plans. Some services, such as outpatient mental health care, often are provided only on a limited basis.
Many people like HMOs because they do not require claim forms for office visits or hospital stays. Instead, members present a card, like a credit card, at the doctor’s office or hospital. However, in an HMO individual may have to wait longer for an appointment than he would with a fee-for-service plan.
In some HMOs, doctors are salaried and they all have offices in an HMO building at one or more locations in individual’s community as part of a prepaid group practice. In others, independent groups of doctors contract with the HMO to take care of patients. These are called individual practice associations (IPAs) and they are made up of private physicians in private offices who agree to care for HMO members. Individual select a doctor from a list of participating physicians that make up the IPA network. If an individual is thinking of switching into an IPA-type of HMO, he needs to check whether doctor participates in the plan.
In almost all HMOs, individuals are either assigned or choose one doctor to serve as patient’s primary care doctor. This doctor monitors health and provides most of patient’s medical care, referring to specialists and other health care professionals as needed. Patient usually cannot see a specialist without a referral from primary care doctor who is expected to manage the care received by the patient. This is one way that HMOs can limit patient’s choice.
Types of HMOs
HMOs operate in a variety of forms. Most HMOs today do not fit neatly into one form; they can have multiple divisions, each operating under a different model, or blend two or more models together.
In the staff model, physicians are salaried and have offices in HMO buildings. In this case, physicians are direct employees of the HMOs. This model is an example of a closed-panel HMO, meaning that contracted physicians may only see HMO patients.
In the group model, the HMO does not employ the physicians directly, but contracts with a multi-specialty physician group practice. Individual physicians are employed by the group practice, rather than by the HMO. The group practice may be established by the HMO and only serve HMO members (“captive group model”). Kaiser Permanente is an example of a captive group model HMO rather than a staff model HMO, as is commonly believed. An HMO may also contract with an existing, independent group practice (“independent group model”), which will generally continue to treat non-HMO patients. Group model HMOs are also considered closed-panel, because doctors must be part of the group practice to participate in the HMO – the HMO panel is closed to other physicians in the community.[4]
Physicians may contract with an independent practice association (IPA), which in turn contracts with the HMO. This model is an example of an open-panel HMO, where a physician may maintain their own office and may see non-HMO members.
In the network model, an HMO will contract with any combination of groups, IPAs, and individual physicians. Since 1990, most HMOs run by managed care organizations with other lines of business (such as PPO, POS and indemnity) use the network model.
HMO Plans
HMOs are the least expensive, but also the least flexible of all the health insurance plans. They are geared more toward members of a group seeking health insurance.
HMO advantages:
• They offer their customers low co-payments, minimal paperwork, and coverage for many preventive-care and health-improvement programs.
HMO disadvantages:
• Individual must choose a primary care physician, also known as a PCP.
• HMOs require that individual see only network doctors or they won’t pay.
• Individual must get a referral from your PCP to see a specialist.
