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SolveYourProblem
eLearning Series:
Health Insurance: Your Questions Answered
What does everything mean & how
to choose the right policy
( 18 pages )
HEALTH
INSURANCE PROVIDERS:
HMO's
Health
Maintenance Organizations (HMO)
The number of
Health Maintenance Organizations (HMOs) is growing by leaps
and bounds and is in direct correlation with increasing health
care costs.
The purpose of
HMOs is to manage health care by using a prepaid model that
emphasizes early treatment and prevention. This prepayment
is referred to as a service-incurred basis and is paid by
the consumer.
This emphasis
on prevention such as routine physicals, diagnostic screening
is paid for in advance. The model is a direct contrast to
health insurance plans that historically did not pay for
preventive programs but only paid after the fact for injury
and illness.
In theory, the
HMOs focus on prevention is ultimately supposed to reduce
health care costs. At the same time, HMOs provide medical
treatment, hospital and surgical when needed.
There is another
way that HMOs differ from the traditional health insurance
providers. HMOs have two step system that is not shared by
insurance companies. Under the traditional method, consumers
receive the health care itself from the medical profession
and the financial coverage from the insurance company.
In sharp contrast,
the HMO provides both the health care services AND the health
care coverage.
These are combined
because the HMO is made up of medical practitioners who provide
specific services to HMO members at prices that are pre-set
and the HMO member agrees to pay the HMO a specified amount
in advance to cover necessary services. Therefore, the HMO
is furnishing health services as well as making the financial
arrangements.
As we have stated,
the emphasis on prevention and the effort to containing cost
is the major factor for developing HMOs. However, federal
law also encourages the development of HMOS. They may receive
government grants as well as requiring certain employers
who offer health benefits, to offer HMO enrollment as an
option by meeting certain criteria.
The basic structure
of HMOs includes contractual agreements with a variety of
facilities and health care providers to provide services
to HMO subscribers. Within this structure are four different
types, Group, Staff, Network and Individual Practice Association.
Group
model – Early on this was the predominant scenario.
With this arrangement the HMO contracts with an independent
medical group that specializes in a variety of medical
services and the HMO in turn provides these services to
members. Additionally, the HMO is paying another entity
as a whole rather than individuals.
Staff
model – This arrangement is pretty self-explanatory
wherein the physicians are paid employees working on the
staff of an HMO in a clinical setting at the HMO physical
facilities. The HMO often owns the hospital as well. In
this model the HMO is taking all the financial risk as
opposed to the group model.
Network
model – This arrangement works like the Group
model with the difference being that the HMO will contract
with more than one group to provide the services. The primary
purpose for this model is to provide convenience and increase
accessibility for the members.
Individual
Practice Association Model – This structure is
designed to give maximum flexibility to the HMO members
wherein they contract individually for all services. There
are no separate HMO facilities and all services operate
out of their own facilities.
There are several
types of groups that may sponsor HMOs, some of which are:
- Medical schools
or associations
- Labor unions
- Physicians
- Hospitals
- Insurance companies
- Labor groups
- Consumer groups
- Service organizations
(Blue Cross/Blue Shield)
- Government
entities
Most HMOs restrict
membership to a narrowly defined group. For instance, a labor
union might limit enrollment to active members of their union.
 
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