Health Maintenance Organization (HMO)

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One of the various institutions which provide coverage for health related expenses to seniors in United States is the Health Maintenance Organization or HMO, as it is commonly known.

Objectives of HMO:

The creation of HMOs or such managed care institutions, were targeted at protecting patients, especially seniors from rising medical costs. These institutions work towards predetermining the maximum possible cost for a particular medical service. After this, certain hospitals, physicians and other providers are taken into a contract, by which they have to accept the pre-determined amount in lieu of services to assured patients that they get through the HMOs.

Basic Functions:

HMOs provide a network of doctors and facilities that cater to the medical requirements of patients, specially the aged ones.

Under this network, physicians and facilities accept prefixed pay for the services they provide. This helps the HMOs to keep costs on the whole at bay, and that too providing good business to the providers.

One of the basic requirements for participants in such a program is the selection of a doctor who would supervise the overall plan of taking care of their medical needs. Such a doctor also known as a Primary Care Physician (PCP) works on such details as selecting a specialist if required or a lab for tests. However this has to be selected from within the network.

In regards to payment formalities, patients need to pay a monthly fee and additional payments for each physician visits (which varies in terms of the type of doctors).
HMOs in this way are affordable and user friendly, however, not without certain minor flaws e.g. if somebody who already consults a family doctor, has to go to a new doctor, if his/her family physician is not enrolled with the HMO.

HMO: A Managed Care Institution

As evident from the basic functions of an HMO, it is very different from a conventional Health Insurance program.

The biggest difference is that an HMO is actively involved in managing the health care services provided to patients enrolled with it.

The most important concept of an HMO is the function of a PCP or Primary Care Physician. This role acts as a catalyst to keep medical costs at bay by way of:

  • Specific medical activities as specialist visits depending on the disease and specific medical tests.
  • Removal of unnecessary medical expenses as in unnecessary tests, medicines etc. which would have taken place under normal situations.

A PCP first examines the patient and figures out a specific plan for the patientís treatment, which may include, visit by a specialist, specific tests from enrolled labs, etc. However HMOs do not cover situations like treatment of chronic diseases.

Different types of HMOs:

There are three most commonly used models on which an HMO functions. These are:

  • The Staff Model: Under this model, physicians act as salaried employees of the HMO. They examine/treat patients at HMO offices only.
  • The Network Model: Physicians under this model are bound by an open contract with the HMO and get paid accordingly to that contract. This does not restrain the physicians to visit patients who are not enrolled to the HMO.
  • The Group Model: As in a staff model, this is a close ended model. The only difference is that, under this model the HMO gets into a contract with a group of physicians and payment is made to the group which in turn disburses to individual doctors.

Some of the largest HMOs in the United States are Aetna, CIGNA, Kaiser Permanente and Wellpoint.

There are many factors which go on to support a facility like the HMO. On the other hand, there are some which discourage it. Overall, it is recommended that one carefully evaluates factors like coverage, premium payable and health care requirements before one chooses an HMO or a conventional health insurance plan.

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