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HMOs ~ Health Maintenance Organizations
What are HMOs?
(Information below was reposted with the permission of the New England Association of HMOs)
Health Maintenance Organizations, or HMOs, are health plans that are
responsible for delivering, or arranging for the delivery of, and paying for
their members' medical care. First created in the 1920s, HMOs have
become very popular over the past decade because of their success at
making high-quality health care more accessible. Today, more than 3.7
million Maine, Massachusetts, New Hampshire, and Rhode Island
residents receive their health care through HMOs.
· Full Range of Benefits
HMOs provide access to services ranging from primary care office visits
to highly sophisticated medical interventions for life-threatening
conditions. They cover the full range of health care services, including
physician, hospital and outpatient services, laboratory tests, x-rays, home
care, rehabilitation therapy, mental health care, and other services.
HMOs also offer supplemental benefits, such as prescription drugs.
· Low Out-of-Pocket Costs
Unlike ordinary insurance, in which patients pay a fee 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 health insurance. Moreover, while ordinary insurance
commonly covers only 80% of many medical expenses, HMOs usually
have minimal or no 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. Generally, the HMO--not the
member--processes the paperwork. 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
· Prevention / Wellness
HMOs take an active interest in helping their members stay healthy, not
simply treating them once they become ill, as conventional health plans
do. Most provide health education classes on topics such as nutrition,
stress management, smoking cessation, parenting, CPR, and first aid.
Many HMOs offer discounts at health clubs and fitness centers and
provide cancer screening and other tests for early detection and
treatment of disease.
· Networks: Controlling Costs, Ensuring Quality
HMOs employ or contract with select networks of doctors, hospitals,
and other types of health care providers. HMO members use providers
within their plan's network. This system has enabled HMOs to control
health care costs as well as monitor providers for quality. Because
HMOs direct a high volume of business to providers within a network,
providers are able to offer HMOs lower prices for their services.
Networks also enable HMOs to monitor the quality of care their
members receive. HMOs review their providers' credentials before
accepting them into the network. 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
duplicative tests, ensures that treatment is provided in the most
appropriate setting, and establishes high standards of care.
· Emphasis on a Personal Physician Chosen by the Member
Upon joining an HMO, members select a primary care physician who
becomes both their personal doctor and their health care manager.
Primary care physicians advise patients on personal health issues,
diagnose and treat medical problems, and coordinate and monitor the
care patients receive from specialists. This system, known as "managed
care," ensures that the treatment HMO members receive is efficient and
appropriate. By having a primary care physician serve as a patient's
guide through the health care system, HMOs eliminate the fragmented
treatment a patient may receive under traditional indemnity health
· Increasing Access to Care
HMOs increase access to health care in a variety of ways. Attractive
HMO premiums enable more businesses to offer health coverage
benefits to their employees. In addition, HMOs' emphasis on preventive
care means members are covered for a broader range of health services
than are persons with traditional insurance. Because members do not
have to file reimbursement claims or pay deductibles, and are responsible
for only minimal co-payments, HMOs remove financial barriers present
with indemnity insurance that can discourage people from seeking care.
Finally, HMOs do not impose restrictions on pre-existing conditions or
require waiting periods for persons enrolling as part of a group.
What are HMOs · Types of HMOs · Frequently Asked Questions · Glossary of Terms
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