Written on January 2, 2009 at 4:34 pm by admin

Health Maintenance Organization

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A Health Maintenance Organization, also known as an HMO, provides health insurance coverage to individuals in the United States.

Health Maintenance Organization Basics

Managed care organizations, such as the Health Maintenance Organization, were created in an effort to control escalating health care costs. These organizations establish a maximum fee that health care providers can charge for a particular service. Hospitals, doctors, and other health care providers who have a contract with a managed care organization are bound to accept this set amount. In return for accepting a lower fee, providers are listed in directories, which are then presented to policyholders as referral directories or “approved physician” directories.

This arrangement is beneficial to all parties involved, because it allows providers who have a contract with a Health Maintenance Organization to receive more patients (referrals), while allowing the HMO to charge their customers a lower monthly premium for insurance coverage.

Managed Care

s mentioned previously, HMOs work slightly different than the traditional health insurance plan. One of these differences is the active role that HMOs take in managing their patients’ health care services.

In an effort to reduce the cost of health care and reduce unnecessary health services, most HMOs require their members to choose a primary care physician. This physician assesses a patient’s health care needs and if necessary, refers the patient to another doctor or specialist. In most cases, the patient must have the referral if they want specialist services to be covered. However, there are exceptions to the rule, such as emergency medical treatment and chronic illness treatment.

Preventive services are also an important part of the Health Maintenance Organization’s managed care plan. To encourage preventative care, such as mammograms, immunizations, and physicals, many HMOs provide members with free or reduced cost services.

While many experts believe that the Health Maintenance Organization has helped the health care market, there are critics who regard the HMOs as monopolies who offer restricted health care services to patients. If you are deciding between an HMO plan and a traditional indemnity plan, you should take time to carefully evaluate the coverage and the premiums that are being offered with both options. You should also make an effort to determine your health care needs in the future. This will help you to choose the coverage that will best suit your needs.

Health Maintenance Organization Act of 1973

The first HMOs began as early as 1910. Though there were many people who supported the idea of managed care organizations, the number of HMOs declined to less than 40 by 1970. It was at this time that a man named Paul Ellwood, who is now known as the “father” of the HMO, helped to enact the Health Maintenance Organization Act of 1973. This act was very important to the expansion of the Health Maintenance Organization and had three main provisions which included:

The awarding of grants and loans to plan, start, and expand the Health Maintenance Organization
The removal of state-imposed restrictions on HMOs
A new rule requiring large employers (those with more than 25 employees) to offer HMO options in addition to indemnity insurance options upon request.

These provisions helped HMOs to grow rapidly, because it gave the new organizations access to the all-important employer-based market.

Types of HMOs

Organizations vary, but most HMOs operate under one or more models. Here are the three most common:

Staff Model – Sometimes called a closed-panel HMO, the staff model is an example of physicians who are direct employees of HMOs. Physicians are salaried and see only HMO patients in HMO offices.
Group Model – In the group model, the HMO pays a physician group. The group then pays the money to individual physicians. Like staff models, group models are also known as closed-panel HMOs.
Network Model – This is the most common model. Also known as an open-panel HMO, this model allows an HMO to contract with a combination of groups and also allows physicians to work with an HMO while maintaining their own office and seeing non-HMO patients.

When searching for an HMO, there are many different companies to consider. Here are a few of the largest: