Differences Between Traditional Health Insurance Plans and HMOs
Part 2, Chapter 7: Managed-Care Plans Page 4
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Table 14: Comparison of Traditional Plans and Health Maintenance Organizations
Traditional Plan |
HMO |
| Preventive services are not generally covered | A wide range of preventive services are generally covered, including vaccinations, screening tests, and yearly physicals |
| Out-of-pocket costs may be significantly higher for consumers | Out-of-pocket costs may be significantly lower for consumers |
| Consumers must file a claim form after each visit to a provider and after each test or service | Claim forms are not usually required as long as network providers are involved |
| There are often concerns about the possibility that a provider's charge may exceed the insurance company's determination of the UCR | Since network providers follow network rules, consumers need not generally be concerned about issues related to the UCR |
| There is no need to obtain advance approval prior to consulting a specialist or arranging expensive medical tests, although some traditional plans may require pre-authorization prior to hospitalization | Prior approval by the primary care physician is generally required before consulting a specialist or arranging for expensive medical tests |
Under certain circumstances, HMOs may grant approval for a participant to consult an out-of-network provider, particularly if the provider has specialized skills or expertise that are not available within the plan network. However, the process of obtaining such permission may sometimes be difficult and time-consuming.
There are several ongoing controversies in regard to HMOs. One important controversy revolves around the question of whether HMOs are likely to be able to control the costs of medical care in the long run. According to supporters of the HMO concept, the gatekeeper system may eliminate unnecessary tests and services, and the emphasis on preventive care may result in a reduction in the need for hospitalization and expensive treatments. Those aspects of the HMO system may eventually reduce costs considerably. However, not every one is convinced that HMOs will be able to control the costs of medical care on a long-term basis.
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