A health maintenance organization, or HMO, is a type of insurance than can be purchased through group health insurance. HMOs, sometimes called managed care organizations or health plans, are a popular choice for health insurance. In California alone, the Office of the Patient Advocate estimates that about half the people living in California get their health care through an HMO.
Identification
With an HMO, you pay a certain amount of money each month in exchange for a specific package of health care services. An HMO makes arrangements with a group of health care providers--including doctors, hospitals and other medical professionals--who make up the HMO's network. When you join an HMO, the HMO agrees to pay for your medical costs (minus applicable copays and deductibles) as long as you visit health care providers in the HMO's network. If you join an HMO, you also must choose a primary care physician, or PCP. You can't see other doctors or specialists, even those in the HMO's network, without a referral from your PCP.
Benefits
HMOs often offer the most affordable health insurance option for many people. In most cases, you only have to pay a copay, a fee that ranges from $10 to $100 in most cases, when you visit a medical professional, and your insurance covers the remainder of the cost. Unlike some traditional plans, when you use an HMO you don't have to worry about being reimbursed for costs or submitting paperwork. The HMO works directly with the medical services you're using to take care of those details.
Challenges
Using an HMO means that you have to get approval from the HMO before undergoing certain treatments or procedures. Because HMOs base their decisions on a treatment's proven effectiveness, they may refuse to pay for experimental procedures or treatments that haven't had time to be scientifically proven. Sometimes HMOs may require you to try a cheaper alternative before agreeing to pay for a more expensive treatment. If you try to bypass the referral process and go ahead with an out-of-network treatment or one that hasn't been approved by the HMO, you will be responsible for the total cost of the treatment.
Considerations
If you have a chronic or ongoing health condition that requires you to see a specialist or regularly undergo specific treatments, such as hormone therapy, check with your HMO to find out if you need a separate referral for each of these visits or if you can have a standing referral. Find out, too, what's required to appeal your PCP's decision not to refer you to a specialist or what may be behind your HMO's decision to deny a particular treatment.
Warning
An HMO's network of service providers is not fixed, and your health care provider may move out of network between visits. Don't assume that a provider is in network simply because he was in network before. It's always a good idea to confirm with the doctor and your HMO before an appointment.
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