POS plan members are not obligated to choose the system to be used until the point of service delivery. For example, using an out-of-network provider without a PCP referral usually results in higher participant cost share. This model has gained a degree of popularity in the commercial health sector because it offers enrollees greater flexibility and freedom of choice than a standard HMO plan. Finally, many traditional, indemnity health insurance plans now incorporate managed care features such as prior authorization of nonemergency hospital admissions and utilization reviews.
Such plans are often referred to as managed indemnity plans. Gold et al. If you have a question or comment, please let us know. Employment Opportunities. Skip to main content. In addition, it would be useful to know whether managed care does have the potential to result in overall savings to Medicare and Medicaid, if it is extended more widely, or whether only certain forms of managed care, provided in a limited set of organizational settings, are effective. These issues have not yet been addressed.
Gary Swearingen provided excellent research assistance throughout the development of this article. Reprint requests: Kathryn M. Medicaid-only HMOs are not included in this data base. National Center for Biotechnology Information , U. Health Care Financ Rev. Kathryn M. Copyright and License information Disclaimer.
Copyright notice. This article has been cited by other articles in PMC. Abstract During the past decade, the number of and enrollment in health maintenance organizations HMOs have grown dramatically.
Introduction Research on health maintenance organization HMO participation in public programs and on the effects of HMOs in serving public program enrollees has focused primarily on the Medicare or Medicaid experience of these HMOs. The specific questions to be addressed are: What changes in HMO organizational structure and management policies have occurred over time in response to changing market conditions?
The importance of the model type in assessing HMO performance rests with several issues: The HMO's ability to expand flexibly and to increase its market share is considerably greater for HMOs that do not need to invest in building or in purchasing new facilities prior to expansion.
Profit status and chain affiliation One of the strongest trends in recent years has been the conversion of nonprofit HMOs to for-profit status. Public program participation Rapid changes in the HMO industry have occurred in response to competitive pressures and changes in the legal and regulatory environment within which HMOs are operating.
Of the 92 plans enrolling Medicaid beneficiaries in Oberg and Polich, : 65 percent were federally qualified compared with 57 percent of all HMOs. Utilization controls and financial incentives A principal characteristic of HMO organizations is the provision of managed care services to enrolled populations.
Utilization management methods A number of studies have identified a range of utilization management methods that are used to control unnecessary use and costs of health care. GHAA reports that among all HMOs that responded to their annual survey, the distribution of utilization management activities included: Primary care gatekeepers 93 percent.
Concurrent utilization review 94 percent. Retrospective utilization review 89 percent. Prior authorization for inpatient care 88 percent. Primary care physician practice profiles 44 percent. By contrast, Langwell, Carlton, and Swearingen report that PPOs responding to a survey of interest in Medicare contracting indicated that PPO utilization management activities included: Preadmission certification 78 percent.
Concurrent utilization review 51 percent. Retrospective utilization review 55 percent. Mandatory second surgical opinion 44 percent. Discharge planning 31 percent. Physician practice profiles 23 percent.
Financial incentives to physicians Physicians are the central decisionmakers in HMOs, as well as in fee-for-service settings. A number of ways in which this kind of management may occur are: HMOs may select physicians with characteristics and experience that suggest their practice styles will be consistent with the HMOs' objectives. Utilization management and performance Although a number of industry case studies of the effectiveness of specific utilization management techniques has been undertaken e.
The organizational characteristics that were associated with a particularly low ratio of HMO hospital-use-to-market-area-hospital-use were: HMOs in which physicians serve only prepaid patients. HMOs in which physicians practice in group settings. HMOs that capitate primary care physicians. Discussion Managed care was offered to a substantial proportion of employees in the United States in Footnotes Reprint requests: Kathryn M.
References Barr JK, et al. Physician decision making: Effects of HMO model type and characteristics of medical practice on utilization. GHAA Journal. Chicago: Jan. Unpublished paper. Princeton, N. Contract No. Prepared for Health Care Financing Administration. Washington, D. Managed care: Whoever has the data wins the game. Proceedings of the 38th Annual Group Health Institute. Chicago: Group Health Association of America; Cost and utilization management in prescription drug benefits. Effect of surveillance on the number of hysterectomies in the province of Saskatchewan.
The New England Journal of Medicine. Physician involvement in strategic planning. HMO Industry Profile. The InterStudy edge, Excelsior, Minn. How do financial incentives affect physicians' clinical decisions and the financial performance of health maintenance organizations? Conversion of charitable HMOs to for-profit status. Physician characteristics and training emphasis considered desirable by leaders of HMOs.
Journal of Medical Education. Proceedings of the Group Health Institute. Atlanta: Group Health Association of America; Formal physician performance evaluations in closed and open panel plans. National evaluation of the Medicare competition demonstrations: Summary report. First annual report: National evaluation of Medicare competition demonstrations.
Law and money spur HMO profit status changes. Understanding HMOs and how they work is critical for choosing a health plan during open enrollment , the yearly period when you can select or switch your health insurance, as well as for avoiding unexpected charges after you're enrolled.
You'll want to make sure that you follow the steps necessary to receive coverage from the HMO. Your primary care provider, usually a family practitioner, internist, or pediatrician , will be your main healthcare professional and coordinate all of your care in an HMO. Your relationship with your primary care provider is very important in an HMO. Make sure you feel comfortable with them or make a switch. In most HMOs, your primary care provider will be the one who decides whether or not you need other types of special care and must make a referral for you to receive it.
Referrals will all be within the region where you live. With an HMO, you typically need a referral for the following:. The purpose of the referral is to ensure that the treatments, tests, and specialty care are medically necessary. The benefit of this system is fewer unnecessary services. The drawback is that you have to see multiple providers a primary care provider before a specialist and pay copays or other cost-sharing for each visit.
A copay is a set amount you pay each time you use a particular service. Referrals have long been a feature of HMOs, but some HMOs may drop this requirement and allow you to see certain in-network specialists without one. Become familiar with your HMO plan and read the fine print. Every HMO has a list of healthcare providers that are in its provider network.
Those providers cover a wide range of healthcare services, including doctors, specialists, pharmacies, hospitals, labs, X-ray facilities, and speech therapists. Accidentally getting out-of-network care can be a costly mistake when you have an HMO.
Fill a prescription at an out-of-network pharmacy or get your blood tests done by the wrong lab, and you could be stuck with a bill for hundreds or even thousands of dollars. It's your responsibility to know which providers are in your HMO's network.
And you can't assume that just because a lab is down the hall from your healthcare provider's office, it is in-network. You have to check. And sometimes out-of-network providers end up treating you without you even knowing about it—an assistant surgeon or an anesthesiologist , for example. If you're planning any sort of medical treatment, ask lots of questions in advance to ensure that everyone who will be involved in your care is in your HMO's network.
There are some exceptions to the requirement to stay in-network. This can include:. Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products.
List of Partners vendors. An individual who needs to secure health insurance may find a variety of health insurance providers with unique features. One type of insurance provider that is popular in the health insurance marketplace is a health maintenance organization HMO , an insurance structure that provides coverage through a network of physicians. Health maintenance organizations HMOs provide health insurance coverage for a monthly or annual fee.
An HMO limits member coverage to medical care provided through a network of doctors and other healthcare providers who are under contract with the HMO. These contracts allow for premiums to be lower than for traditional health insurance—since the health providers have the advantage of having patients directed to them. They also add additional restrictions to the HMO's members. When deciding whether to choose an HMO insurance plan, you should take into consideration the cost of premiums, out-of-pocket costs, any requirements you may have for specialized medical care, and whether it's important to you to have your own primary care provider.
An HMO is an organized public or private entity that provides basic and supplemental health services to its subscribers. The organization secures its network of health providers by entering into contracts with primary care physicians, clinical facilities, and specialists. The agreed payment allows an HMO to offer lower premiums than other types of health insurance plans while retaining a high quality of care from its network.
Passed by former President Richard Nixon, the Act clarified the definition of HMOs as "a public or private entity organized to provide basic and supplemental health services to its members.
However, some out-of-network services, including emergency care and dialysis, can be covered under the HMO. Those who are insured under an HMO may have to live or work in the plan's network area to be eligible for coverage.
But HMO subscribers who receive non-emergency, out-of-network care have to pay for it out-of-pocket. In addition to low premiums, there are typically low or no deductibles with an HMO. Instead, the organization charges a co-pay for each clinical visit, test, or prescription.
The insured party must choose a primary care physician PCP from the network of local healthcare providers under an HMO plan. This means that an insured person cannot see a specialist without first receiving a referral from their PCP.
However, certain specialized services, such as screening mammograms, do not require referrals. If a primary care physician leaves the network, subscribers are notified and are required to choose another PCP from within the HMO plan. A preferred provider organization PPO is a medical care plan in which health professionals and facilities provide services to subscribed clients at reduced rates. PPO medical and healthcare providers are called preferred providers.
PPO participants are free to use the services of any provider within their network. Out-of-network care is available, but it costs more to the insured. Both programs allow for specialist services. However, the designated primary care physician must provide a referral to a specialist under an HMO plan. PPO plans are the oldest and—due to their flexibility and relatively low out-of-pocket costs—have been the most popular managed healthcare plans.
That has been changing, however, as plans have reduced the size of their provider networks and taken other steps to control costs. A point-of-service plan is also like a PPO in that it still provides coverage for out-of-network services, but the policyholder has to pay more for those services than if they used in-network providers.
However, a POS plan will pay more toward an out-of-network service if the policyholder gets a referral from their primary care physician than if they don't secure a referral. POS plans also do not have deductibles for in-network services, which is a significant advantage over PPOs. Also, POS plans offer nationwide coverage, which benefits patients who travel frequently.
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