Health Feature Articles
This
file is available as a pdf file
What is a Health Maintenance Organization?
Gail Carlson, MPH Ph.D, State Health Education Specialist, University of Missouri Extension
Health Maintenance Organizations (HMOs) are only one of
many types of managed care arrangements. However, it is
one of the oldest forms of managed care. Some describe
it as "pure" managed care. If the different types of
managed care were placed along a continuum, Managed
indemnity plans, which are very similar to conventional
insurance, would be at one end. At the other end would
be HMO's. As one moves toward the HMO end of the
continuum, the organizations become more complex and
have higher operating costs. However, more emphasis is
placed on prevention and quality of care. There is also
more opportunity to control health care costs in HMOs
than in indemnity plans.
Individuals who join an HMO are considered members.
Typically HMOs provide members with comprehensive health
care. When someone joins an HMO, they select a primary
care physician from the list provided by the HMO. That
primary care physician coordinates all of that member's
medical care. If care by a specialist is needed, the
primary care physician will refer the member to a
specialist who is usually also in the HMO network. In an
HMO, physicians may be employees of the HMO or the HMO
may contract with independent physicians to provide
care. Members who go outside of the network to receive
care (unless given prior approval) will probably pay all
or most of the cost of that care out of their own
pockets.
HMOs use a "capitated" financing system. Care is provided to each member of the plan for a fixed amount. Typically, an employer contracts with an HMO to provide care for its employees and pays this fixed charge. If you are part of a Medicare HMO, then Medicare pays the fee. Some HMOs also charge individuals a small $5 to $10 co-payment for each visit. If the HMO is efficient and keeps its members healthy, it will make a profit. If it has too many members who require costly sick care, its profits are smaller or it may lose money. Remember under a "capitated system", the HMO is paid a fixed amount per person rather than for each visit or by type of service.
 |
Site Administrator: |
|
|
|
Last Updated 04/25/2008
