A Health Maintenance Organization (HMO) offers comprehensive medical coverage through an exclusive network of providers, either owned or contracted. When you select an HMO, your medical care will be guided by a Primary Care Physician, who will refer you to specialized care when needed. In an HMO plan you must seek medical care within your provider network, although some exceptions are made for emergencies. Your out-of-pocket expenses are limited to a copayment at the time of your visit to a doctor, hospital, or other provider or the purchase of prescription drugs. No claim forms are needed.
Generally, the price that the consumer pays for HMO managed care is less than that of most other health insurance coverage plans. However, the reimbursement method that is used for HMOs when it comes to the physicians that are administering the care is a cause for concern, as critics state that he or she may be put in the position of having to weigh their own monetary gain against the level of care required by the patient. HMO physicians are paid a fixed price per patient. This is called capitation, which may more specifically be defined as the fixed amount of money paid on a monthly basis to an HMO medical group or to an individual health provider to cover the full medical care of an individual. Under this program, the physician is taking on a “risk contract”. It is the physician’s duty to manage the patient’s care, and is at risk of losing money if the total expenses ends up being more the predetermined amount of funds.
What’s The Difference Between an HMO and Traditional Health Insurance?
“As more and more “Incentives” to cut back on medical care are put in place by the new class of medical entrepreneurs, the patient often suffers.”
Traditional Health Insurance
Traditional health insurance (usually–but not always–major medical insurance policies issued to an employer and available to individuals for purchase) is not subject to review by the Department of Managed Health Care but by the Department of Insurance. Any health care provider licensed by the Department of Insurance is under their jurisdiction. If your health coverage provider’s name includes “insurance”, “assurance”, or “indemnity”, you most likely have traditional health insurance. If you are unsure whether your health care coverage is managed care or traditional insurance, contact the Department of Managed Health Care (888) HMO-2219 or the Department of Insurance (800) 927-4357, and they can determine this for you.
Most people still have traditional health insurance coverage. Under these plans, your insurance usually has a deductible you must pay before the insurance applies, and you are allowed to choose your doctor whose fees are reimbursed when his or her office bills the insurance company directly. Sometimes you have to choose your doctor from a “preferred provider” list and pay a “co-pay” for each visit.
These plans are regulated by the Department of Insurance which accepts and acts on consumer complaints. In many cases the Department is helpful and will intervene when you file a complaint against your insurance company.
Health Maintenance Organizations (HMOs)
About 70% of all insured people are not using an HMO for insurance purposes. Under these plans you pay a flat cost for all of the medical care you might receive. You are required to utilize use the HMO’s doctors and facilities and all care provided by a specialist must be given the go-ahead by your “primary care physician”. Differing from normal health insurance plans, Health Maintenance Organizations almost always have an appeal process in the plan that must be adhered to when a claim is denied. There are pros and cons to this, but a personal injury law firm will be able to help you through it. This appeal process is found in your plan’s booklet.
HMO’s are overseen by the DMHC instead of the DOI.