Medical care
Not all insurance plans are created equal. Some people use a preferred-provider plan, while others opt for a fee-for-service arrangement. Some people, however, prefer the services of a health maintenance organization (HMO). Although sometimes demonized in the national media, HMOs serve a vital purpose in bringing down costs while helping patients maintain peak long-term health.
History
HMOs started in the late 1970s as an experiment to control rising healthcare costs. A traditional indemnity plan paid for services billed by a provider, which sometimes led to an incentive to increase charges more than cost-growth would require. HMOs pioneered the concept of "managed care"--that is, forging a partnership between a primary-care physician, the patient and the insurer to bring down costs and find ways to more effectively treat a patient's long-term health challenges.
Purpose
The purpose of an HMO today is to provide cost-effective relationship-based care. The doctor and patient engage in a long-term relationship, and the HMO typically covers most or all of the cost of preventive medicine. In theory, this allows the doctor to intervene more quickly when a patient's health deteriorates, improving the patient's prognosis for recovery and reducing the payer's total cost. In addition, the insurer approves or denies payment on specific charges from doctors and hospitals if the payer believes the billing was for services that are not medically necessary.
Typical Coverage
HMOs cover most or all of the expenses related to routine well-person care (e.g., annual physicals or immunizations) and routine doctor's visits for illnesses and injuries. They also cover the cost of hospitalizations and for specialist services that are authorized by the patient's primary-care physician.
More HMOs are becoming actively engaged in disease management. For example, a patient with diabetes may not only be covered for treatment costs, but the HMO itself may assign an internal nurse case manager to work with patients who appear to be noncompliant with their treatment plan, in order to protect the patient's health and to reduce the costs associated with an avoidable medical event like renal failure due to insulin insufficiency.
Typical Exclusions
HMOs rarely pay for elective cosmetic procedures like face lifts and tummy tucks. In general, if a surgical procedure is not medically necessary, then the HMO will deny payment for the procedure.
HMOs are a mixed bag with regard to psychiatric, chiropractic and substance-abuse treatment. Coverage for these conditions is often negotiated with employer groups at different rates.
Costs and Benefits
Insurance premiums for HMOs are not substantially different than other plans, for most employer offerings. However, a patient's out-of-pocket experience will vary widely depending on the type of insurance plan she selects. An HMO has minimal out-of-pocket expense related to routine well-care. However, a preferred-provider plan may have higher out-of-pocket expenses for routine care, but it is more likely to cover a wider range of conditions (including elective ones) and have less cost associated with out-of-town emergency care.
Tags: associated with, down costs, long-term health, medically necessary, patient health