HMO - Health Maintenance Organization Basics
When you are shopping for a medical insurance plan, you have different options to choose from. One popular plan is an HMO (Health Maintenance Organization). An HMO is a form of managed care. Managed-care plans aim to offer comprehensive health care to its members through a network of health care providers.
An HMO is designed to provide affordable medical care. Costs are controlled by restricting your care to the physicians, care providers, and hospitals that are part of the HMO network. If you go outside the network for care, you pay the entire cost out-of-pocket. .
If you are an HMO member, your costs come in two main forms. You pay a monthly premium. You are also required to pay a co-payment for most services. A co-payment is an amount paid at the time of treatment to offset a portion of the medical costs. The amount of the co-payment varies depending on the specific medical treatment. For instance, medical office visits have a different co-payment rate than prescriptions and more involved medical treatments.
A distinguishing feature of an HMO is that it requires you to select a primary care physician (PCP). Your PCP acts as a gatekeeper. You cannot see a specialist or any other physician or care provider, unless you are referred for treatment by your PCP.
Why Choose an HMO?
Health Maintenance Organizations are generally more affordable than other managed care insurance systems. The monthly fees and co-payments are usually not high and are an affordable alternative to paying a percentage of the bill like other managed care providers require.
HMOs are profitable when the members are healthy. Therefore, HMOs focus on preventative care and checkups to catch heath problems early, before they escalate into expensive, difficult to cure diseases. HMOs provide you with a wealth of medical information on how to prevent illness and disease. They distribute health guides and informative handbooks on how to stay healthy and avoid getting sick.
HMOs also have a good reputation and service record, generally speaking, for pediatric medicine.
HMOs require you to fill out very little paperwork, as opposed to a fee-for-services plan that requires you to file claims. If you don't like filling out paperwork (who does?), this can be a big plus.
Why Not to Choose an HMO?
HMOs are more restrictive than other managed care providers.
HMOs only cover you when you visit doctors within the HMO network. If you want to see a specialist and the physician is not in the HMO network, you will have to pay out-of-pocket expenses.
HMOs offer services only at designated facilities, so an HMO can be a bad choice, if it is not geographically convenient for you to visit the treatment facility.
You may feel restricted by having all care managed by your PCP. When you have a skin rash, it can be frustrating to have to see your PCP before going to the dermatologist that you know you want to see. It adds another step and sometimes a separate visit to get to a specialist. This can require additional time off work.
In addition to a referral from your PCP, your treatment may need approval from your HMO. HMOs have an incentive to keep you healthy, but also an incentive to restrict care. The less care, the lower the HMO’s costs, the more profit they make. This can result in you being denied care that you want. There are processes in place to appeal denials, both through the HMO and through state regulators.
Lastly, with any managed care insurance plan, if you move to an area outside of the plan's coverage, you have to re-qualify for insurance coverage. If you have a pre-existing condition and are not eligible for a group health policy, you could find yourself without insurance.
An HMO may be a good solution for your health care needs. Monthly fees and co-payments are often inexpensive. You are covered regardless of how often they visit their physician each month. However, HMO members do have restrictions that could hinder specialized treatment if needed. Before you decide to go with an HMO, think about your individual and family health care needs. The more your medical needs fall into preventive medicine, the better an HMO serves you. Conversely, if you regularly need specialized medical care, then an HMO is less attractive .