HMO---short for health maintenance organization---is a type of group health insurance plan that's overseen by a managed system of doctors, facilities and medical personnel who work directly for the HMO. Selecting this type of plan has its benefits and drawbacks, so it's important to weigh one's individual needs before making a decision.
Seeking Treatment
When covered by an HMO, patients in need of a routine medical exam must visit their HMO doctor (or primary care physician), the doctor who treats the patient for most illnesses. Typically, the patient is required to pay a co-payment for each visit. When a visit to a specialist is required, the patient must first set up an appointment with this doctor to secure a referral. Often, the referral will be for a specialist within the clinic or practice and almost always will be someone within the HMO network.
How They Function
HMOs are based on capitation, meaning doctors are paid a flat monthly fee for each patient covered. In order to receive full benefits, patients can only see doctors or go to hospitals that are part of the HMO plan. Because things sometimes may not be covered by the plan, members may be required to go through an appeal process to secure payment for certain services. If turned down during an appeal process, members can continue to appeal the decision until the situation is resolved.
Pros of HMOs
HMOs tend to have lower premiums than PPOs (preferred provider organization or participating provider organization), since the cost of care is dispersed among members. There isn't a lot of paperwork required of patients who have an HMO. Another benefit is HMO plans tend to provide programs promoting a healthy lifestyle.
Cons of HMOs
Being covered under an HMO means having restricted choices as to whom treats conditions, since in-network specialist referrals are somewhat limited, according to Medhealthinsurance.com. This can become particularly problematic in the case of unusual or hard-to-diagnose illnesses, which may require a visit to a specialist outside of the system (at a much higher cost to the patient). Some people also consider it inconvenient to have to see a primary care physician before receiving a referral for any additional treatment. Because access to specialists is limited, it can be difficult to obtain specialty drugs. Seeking a referral also can be a time-consuming process, one that may prove troublesome for people with serious illnesses like cancer.
The Doctor's Role
It's important to select a primary care physician who shares a similar philosophy of care. This doctor can play an important role in advocating for patients; having a primary care physician who disagrees with a patient's desires or needs can prevent the patient from taking the next step for medical treatment, notes CBSnews.com.
Medicare HMOs
Seniors can opt to join a Medicare HMO, which is contracted with the federal government under the Medicare Advantage program. It offers an alternative to the traditional fee-for-service approach of Medicare and functions largely the same way as traditional HMOs.
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