Merritt Personal Lines Manual: Health Maintenance Organizations (HMOs)
An HMO is an entity that contracts with medical facilities, physicians, employers and sometimes individual patients to provide medical care to a group of individuals. This care is usually paid for by a company or other group at a fixed price per patient. Patients generally do not have any significant "out-of-pocket" expenses.
The principal objectives of HMOs aim to reduce medical expenses by:
- stressing preventive medicine physical exams and diagnostic procedures;
- reducing the number of unnecessary hospital admissions;
- reducing the average number of days per hospital visit;
- reducing duplication of benefits; and
- saving on administrative costs.
If you join an HMO, you'll pay a monthly or quarterly premium. That premium will remain the same whatever your medical history and whether or not you use the plan's services. The plan will also charge a co-payment for certain services. For example: $35 for an office visit or $15 for a prescription. This is one of the ways in which the plans adjust for people who use the services more heavily than others.
By joining an HMO, you may have only a few out-of-pocket expenses for medical care as long as you use doctors or hospitals that participate or are part of, the HMO. HMOs generally don't require you to pay deductibles or co-insurance.
HMOs deliver care directly to patients. Whether patients go to a medical facility to see a doctor or to a specific doctor's office, their business relationship is with the HMO. To many people, the health care providers appear to be interchangeable subcontractors.
This appearance isn't exactly accurate. If you belong to an HMO, you usually have to receive your medical care through the plan by selecting a primary care physician who coordinates your care. A primary care physician may be a family practice doctor, an internist, pediatrician, etc. He or she is responsible for referring you to specialists.
While most of these specialists will be participating providers in the HMO, there are circumstances in which patients enrolled in an HMO may be referred to providers outside the HMO network and still receive coverage.
