Health Maintenance Organizations (HMOs)

What is an HMO?

A health maintenance organization is a type of managed care program that provides health insurance coverage through a network of doctors, hospitals, specialists, and other health care providers.

How do HMOs manage health care?

HMOs aim to provide achieve lower operating costs than traditional insurance providers by negotiating discount rates with health care providers and reducing peripheral medical procedures. The lowered operating costs let HMOs charge a lower premium, which is their primary advantage. Generally a member selects a primary care physician (PCP). This physician acts as a conduit for patient medical care referring patients to specialists when deemed appropriate. Their judgment can become a point of contention with members as their high patient loads and procedural power can sometimes create contentious situations. In addition HMOs used a risk/reward system with PCPs where physicians are paid a fixed amount per member per month and in return agree to provide some of their services without charge. This system discourages addition procedures as they may not be compensated for them. Most services that are not covered by HMOs including experimental procedures, plastic surgery, and some diagnostic procedures.

Checks and Balances

HMOs use internal review systems to manage customer care. Most agencies do it on 2 levels focusing on patients and providers. With patients, HMOs try to identify patients with chronic conditions (ex. Asthma, diabetes) or diseases and assign case managers to monitor and review their treatment to make sure adequate care is being provided. Most providers include preventative care for their members for free or a small co-payment. HMOs also make sure providers are providing adequate care by looking at the amount of money spent per patient. If the amount is too low it may indicate a lack of proper care but if the amount is too high it may indicate a poor utilization of procedural guidelines.