Health Maintenance Organizations (HMOs) are managed care organizations that provide health coverage using a network of doctors, hospitals and other health care providers. They are traditionally used by businesses to provide health care for their employees. The employers pay the monthly premiums--in return, their medical expenses are significantly reduced. However, this only applies to the health care providers within the HMO. Employees who go outside the network will need to cover the expenses in full. There are several types of health maintenance organizations out there, each with it's own benefits, drawbacks and unique features.
Understanding Health Maintenance Organizations
The health maintenance organizations have existed since the early 20th century, but they didn't settle into the current form until the Health Maintenance Organization Act of 1973 set federal rules that defined their operation. At the same time, the act made it easier for HMOs to grow and attract clients. Most notably, it required all employers that offered traditional health care to their employees to sign up for an HMO if they had more than 25 employees.
Under every type of HMO, every employer pays the same monthly premium for HMO's services. Each employee is assigned a Primary Care Physician--a doctor who bears the ultimate responsibility for making sure the employee gets the medical care he or she needs. If an employee has a medical issue, he or she comes to the primary care physician first. If the problem is beyond the physician's expertise or scope, he or she refers the employee to another doctor within the HMO. If employees need emergency treatment, they are referred to hospitals within their HMO. If they need medicine, they are referred to pharmacies within their HMO. Most HMOs are extensive enough to offer a wide variety of services.
There are several different types of HMOs--staff model, group model, open-panel model and network model. Some HMOs have different divisions that operate under different models, and employees usually get to choose which division they want to fall under.
1. Staff Model
In this model of HMO, the physicians and medical professionals are the employees of the HMO and have offices in HMO-owned buildings. The physicians only see patients that signed up for the HMO that employs them.
2. Group Model
In this model of HMO, the physicians and medical professionals are not hired directly. Rather, they belong to multi-specialty physician group practices--private practices that include physicians that specialize in different fields of medicine. The HMO pays the group in bulk, and the physicians decide within the group how the money is distributed. As with staff model, the physicians only see patients that signed up for the HMO that contracted them.
3. Open-Panel Model
Similar to above, except in this case, the HMO contracts an independent practice association. The independent practice association works similarly to a multi-speciality physician group practice, except it's members are allowed to treat non-HMO patients. Under this model, the primary care physicians are allowed to refer employees to medical services outside the network, but the HMO may not provide as much coverage as it would for the employee who stayed within the network.
4. Network Model
In many ways, this is the combination of group model and an open-panel model. An HMO contracts some combination of multi-specialty physician group practices, independent practice associations and fully independent physicians to provide medical services. This model tends to be more popular with the more recently established HMOs.