Definition of HMO
HMOs have grown to fill a major place in providing health care to Americans. However, the basic issues of what constitutes an HMO (the HMO is often confused with the clinics that are operated by them) and how they work, remain an enigma, even to people who are part of an HMO.
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Identification
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Health Maintenance Organizations (HMOs) are a form of Managed Care Organizations. Under its terms, the HMO agrees to provide health insurance coverage to consumers through hospitals, clinics, doctors and other providers with whom they have a contract. This is the main distinction between an HMO and a traditional insurance policy; under the terms of the HMO, only providers that have already agreed to work under the HMOs terms can provide health care.
History
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HMOs or HMO precursors actually have a long history in the United States, dating back to the early 20th Century. However, they were never very popular and had always been small and strictly localized organizations. All of this changed when Paul Ellwood began working with the US Deppartment of Health and Human Services on introducing what became the HMO Act of 1973. This act had three key provisions: 1) financial aid was provided to plan, start or expand an HMO; 2) selected state-imposed restrictions on HMOs were eliminated if the HMOs became federally certified; 3) employers with 25 or more employees were required to offer federally certified HMO options alongside indemnity upon request. The third key provision was the most important, since it guaranteed access to the lucrative employer-offered health insurance plan market for federally certified HMOs.
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Types
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There are a few basic types of HMOs. In the staff model, doctors are salaried employees of the HMO. The group model involves the HMO working with a middle man, who in turn employs doctors. This can either be a "captive" multi-specialty group practice, where both the middleman group and the doctors work entirely for the HMO, or an Independent Practice Association, where both the group and its contracted doctors are free to accept patients and contracts outside the HMO. Finally, there is the network model, which combines elements of the other two models.
Misconceptions
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It is often very hard to tell what model an HMO follows just by looking at it, even if you are a member. For example, Kaiser Permanente is often thought of as a staff model HMO, but it is actually using the "captive" group model.
Function
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When a person joins a HMO, they are often required to select a Primary Care Physician (PCP), or have one assigned to them. The PCP is the consumer's "gatekeeper," or person who evaluates their needs and access to health care. Outside of emergency situations, all access to health care will require a referral from the PCP.
HMOs often prefer low cost; preventative medicine over high cost later treatments, and design their guidelines and contracts to encourage this approach. They also monitor their contracted heath care providers to see who is providing how much and what kind of care, with an eye on keeping them inside the guidelines for providing care. Some HMOs also require that their health care providers give the absolute minimum necessary care to control costs and ensure profits.
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