An HMO, or Health Maintenance Organization, is a managed health care insurance option that focuses on reducing health care costs for members. HMOs include insurance companies, physicians and hospitals working together to provide economical medical care. As the name implies, this health care option is intended to encourage people to seek care early to prevent the need for more intensive care later.
Purpose
HMOs give members access to health care professionals while limiting out-of-pocket costs that are usually associated with medical attention. By reducing these costs, HMOs look to encourage preventive health care to avoid future emergency medical needs.
Facts
Members of an HMO plan select a primary care physician, or a PCP. The PCP is the first contact for all medical attention, including basic care and illnesses. The ease and comfort of visiting the same physician for all medical needs encourages the use of early, preventive medical care.
Medical Care
An HMO member must receive the primary care physician's referral before seeing a specialist within the HMO network of providers. The HMO's network of primary doctors, specialists and hospitals depends on the specific plan and can vary quite a bit. A drawback of HMO plans is that medical expenses incurred outside the network of providers will not be covered by the HMO plan.
Costs
Controlled out-of-pocket expenses is the main reason HMOs attract people in need of health care coverage. An HMO plan member pays a flat fee no matter how many doctor visits are necessary. Members may be required to pay a co-payment for each visit to their PCP. Some managed health care options require members to pay a deductible before insurance coverage will pay the rest of the medical bill. Most HMOs do not require deductibles, reducing costs further for members. HMOs are required to cover all medical expenses within the network without limiting lifetime benefit payouts.
Types
There are three main types of HMOs: staff model, group model and network model. In the staff model, physicians are paid by salary and are direct employees of the HMO. Contracted physicians work in the HMO building and serve only HMO members. In the group model, individual physicians are not direct employees of the HMO; rather, the HMO contracts with a group of physicians and the group distributes payments to individual physicians. In the network model, the most common option, HMOs contract with a diverse combination of physician groups and individual physicians.
Tags: health care, individual physicians, care physician, direct employees, group model, managed health