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HMOs ~ Health Maintenance Organizations
Types of HMOs:
(Information below was reposted with the permission of the New England Association of HMOs)
Q: What are HMOs?
Health maintenance organizations, or HMOs, are health plans that deliver
or arrange for quality care at an affordable price. Unlike conventional
insurers, who simply pay claims, HMOs play an active role in arranging
for appropriate, quality health care. They pay for and provide--or
arrange to provide--access to a comprehensive range of medical
services for a fixed, prepaid premium.
Q: How do HMOs differ from other types of health insurers?
A Focus on Staying Well. HMOs take an interest in helping their
members stay healthy, not simply paying for treatment once they become
ill, as conventional health plans do. HMOs focus on the prevention, early
detection, and treatment of health problems. They provide access to
primary care, including routine physicals, mammograms, blood pressure
tests, and cancer screenings. HMOs also cover prenatal and well-baby
care. Many HMOs offer health education classes and discounts at fitness
Low Out-of-Pocket Costs. Unlike conventional insurance, in which
patients pay a percentage of the bill each time they receive medical
services, HMOs provide health care coverage for a fixed monthly
premium that is, on average, much lower than the cost of old-style,
"fee-for-service" health insurance. Moreover, while ordinary insurance
commonly covers only 80% of many medical expenses, HMOs usually
have minimal co-payments and do not require members to pay
deductibles. Not only do these practices save consumers money, they
remove financial barriers that can prevent people from seeking treatment
early, before health problems become severe.
Minimal Paperwork. The typical HMO member does not receive bills
and does not have to fill out a claims form for routine service. By
minimizing the paperwork traditionally associated with obtaining medical
services, HMOs make it simpler and less costly for their members to get
the health care they need
Q: Can HMO members choose their own doctors?
HMOs employ or contract with select networks of doctors, hospitals,
and other types of health care providers. HMO members must use
providers within their plan's network. Patients who prefer a particular
doctor or health care facility usually make sure the provider is part of an
HMO's network and is accepting new patients before enrolling in the
plan. Upon joining an HMO, a member selects a primary care physician
from a list of doctors who work for or are associated with the HMO. A
member's primary care physician provides routine medical care, refers
patients to specialists within the network, and coordinates and monitors
the treatment the specialists provide. This arrangement ensures that the
care HMO members receive is efficient and appropriate, and it
eliminates the fragmented treatment a patient may receive with ordinary
Q: How do HMOs ensure their members receive quality care?
Before hiring or contracting with physicians or other health care
providers, HMOs carefully evaluate their credentials. Once providers
become part of an HMO network, their performance is routinely
reviewed. Teams of physicians and other health care professionals
regularly look at patient treatment histories in order to evaluate the
appropriateness of all health care services. This practice, known as
'utilization review' or 'utilization management,' discourages the use of
unnecessary procedures and tests, ensures that treatment is provided in
the most appropriate setting, and establishes high standards of care.
HMOs also help network doctors stay informed of "best practice"
guidelines and new medical techniques and procedures. As a result of
this recruiting, screening, and training, HMO doctors are well qualified.
Nationally, approximately 85 percent of HMO doctors, but only 61
percent of all doctors, are certified by their specialty boards.
In addition, HMOs answer to a broad range of organizations that
measure health care quality. The organizations include federal and state
governemnt agencies, private employers, and independent non-profit
review groups. The National Committee for Quality Assurance
(NCQA), for instance, conducts a rigorous HMO accreditation process.
You can find out any HMO's accreditation status through the NCQA
website. NCQA is one of many organizations that evaluate HMO care
for employers and individual consumers. Their "Quality Compass" rating
index that includes more than 50 quality measures, such as cancer
screening rates and measures of asthma care, is used by US News and
World Report and Newsweek to rate HMO care. Medicare
beneficiaries can check the "Medicare Compare" website to find out
how local HMOs perform on quality, cost, and consuemr satisfaction
Q: Do HMOs really hold down health care costs?
Yes, HMOs have shown that they can hold down employers' and
consumers' health care costs. The typical HMO plan costs 15 - 25%
less than traditional insurance, yet HMOs provide more comprehensive
benefits. By offering network doctors and hospitals a predictable volume
of business, HMOs can secure lower prices to pass along to employers
and consumers. Also, HMOs hold down costs by focusing on preventive
care, eliminating the incentives for 'overtreatment' that exist with
fee-for-service coverage, and providing comprehensive, high quality care
Q: Do HMOs cover emergency care?
HMOs pay for treatment in a hospital emergency room in the case of
emergencies such as a serious injury or the onset of life-threatening
medical conditions. In general, HMOs require a patient to seek treatment
for non-emergency health problems from the patient's primary care
doctor. This practice allows HMO patients to be treated in the most
appropriate setting by doctors who are familiar with their medical
histories. At the same time, it reduces the use of costly emergency room
care when such care is unnecessary.
Q: What are the different types of HMOs?
A staff model HMO owns and operates health centers staffed by
physicians employed directly by the HMO. In general, the health centers
offer patients access to a broad range of medical care under one roof,
including laboratory, x-ray, vision, and pharmacy services. A group
practice HMO typically contracts with medical groups who provide
health care services to HMO members under one roof, and who see
patients from other health plans. Independent Practice Associations
(IPAs) are HMOs that contract with individual physicians in private
practice who provide care to HMO members within a private office
Q: Who is eligible to join an HMO?
More than 3.7 million Maine, Massachusetts, New Hampshire, and
Rhode Island residents now belong to HMOs. Most are covered
through their employer. Some HMOs offer direct enrollment for
individuals not eligible for insurance through a group. In addition, many
HMOs offer senior plans for Medicare beneficiaries. About 400,000
ME, MA, NH, and RI Medicare beneficiaries currently belong to
What are HMOs · Types of HMOs · Frequently Asked Questions · Glossary of Terms
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