HMOs are nothing but Health Maintenance Organizations. In case of traditional health insurance, you can choose any physician you wish, and you can also decide which health service to obtain, but in case of HMOs, you have to choose a Primary Care Physician (PCP) from a list of doctors that your health plan has contracted with to provide services. This doctor will be your primary contact for all health services. He or she will manage your care by coordinating the services you should receive on your behalf. So here, your choice is restricted to the providers list.
In simple words, an HMO is an organization that arrange hospitals and doctors into a organization. Members pay a set per-person fee, giving them access to the HMO’s services. Unlike traditional health insurance or PPOs (the second most popular managed care system), HMOs require participants to pick a Primary Care Physician (PCP), who performs necessary health check ups and allows all visits to medical specialists.
It is evident that these HMOs are one of the two most popular forms of managed care networks. According to American Association of Health Plans during their last count, there were 89 million Americans enrolled in HMOs in July. In other words, more than 30% of all insured people are enrolled in HMOs. Under these plans you pay a fixed amount for all of your medical care. You must use the HMOs doctors and facilities and all specialized care must be approved by your PCP.
Advantages and Disadvantages:
- In case of HMOs, this arrangement helps lower general costs, it can still be disliked with some patients. For example, if you are an employer and your employee’s current family physician were not part of the network of the HMO you offer, he or she would have to switch to a network doctor to enjoy the full cost-saving benefits of the plan. Sometimes it tends to be risky by restricting the choice, and ends up plan members in frustration.
- Most HMOs have an enormous network of doctors. There’s a very good chance that your employees’ current physicians are part of this network. Physicians often join more than one popular health care networks in their geographic regions. So there are bright chances to get the specialized services from specialized doctors or specialists.
- Unlike traditional health insurance plans, HMOs nearly always have an appeal process in the plan which you must follow when a claim is denied. This appeal process can be found easily in your plan’s booklet. So it is better to check before hand or prior to join the plan.
- In case of HMOs, the “referral” part of the business can turn out to be a bit muggy because HMOs generally cover only the expense of member visits to doctors and hospitals that are part of the network. It doesn’t matter, if your PCP refers you to a physician outside the network (however chances are very thin), but in that case you will still have to cover the cost yourself for any visits outside the network.
- Another drawback can be; suppose a plan member is just diagnosed with a very rare and serious heart condition and found to be in a very vulnerable health condition. Prior to joining this company or plan he was consulting and getting treatment from a doctor outside this network or sometimes outside the country say Germany or Rome. Naturally, he would want to see the same specialist with the most expertise regarding his particular heart condition. Unfortunately, if the best doctor for the job is not part of the plan network then that plan member must either settle for a doctor within the network, or shell out the medical fees of preferred specialist himself.
- HMOs generally require a small co-payment for medications. HMOs keep drug costs down by frequently prescribing only the generic form of medications. But in traditional health care, drugs may or may not be covered. You will have the option of obtaining the brand name or the generic drug of your choice.
- In HMOs there is no restriction on primary care visits. There may be restrictions on the amount of times you are allowed to see a specialist without getting a new referral. Visits for certain services like physical therapy and mental health, may be limited. But in traditional health care there is no limit on visits, aside from your own financial limitations. Certain types of visits may not be covered under your health plan (e.g. mental health).
- In HMOs, benefits covered are very comprehensive. But in traditional plans these can be comprehensive or sparse – varies with price of plan.
Moreover, HMOs are regulated by the Department of Managed Health Care rather than the Department of Insurance. The DMHC is a new agency that appears to be very aggressive in attempting to resolve the problems with the HMO system. You can visit their website to get more information at dmhc.ca.gov. So if you’re planning to offer health insurance to your employees, you’ll certainly want to understand this widespread form or healthcare, and then apply for a quote at QOOQe.com.