What Is a Medicare HMO?

In order to understand what a Medicare HMO is, it is important to understand what Medicare is and what an HMO is. Traditionally, the two were separate entities and each played a defined role in health care in the United States. Changes in Medicare policy have brought the two together. Combined, they provide a particular way of paying for Medicare supported health care. The Medicare HMO is a recent addition to the health care landscape that requires some defining.

What Is An HMO?

HMO stands for Health Maintenance Organization. HMOs are managed care organizations (MCO) that provide a form of health care coverage. HMOs coordinate a patient's health care according to the regulations of the patient's selected health plan. Health care providers are contracted with the HMO to provide care as outlined by the HMO's guidelines for each health care plan. In exchange, the HMO lists the provider or physician in its list of approved providers thereby directing a steady stream of patients to the providers.

What Is Medicare?

Medicare is a United States government health insurance plan provided to U.S. citizens over the age of 65. Other criteria may qualify someone under the established age limit to be eligible for Medicare. Medicare is partially funded through payroll taxes. Medicare is broken into four parts---hospital insurance, medical insurance, advantage plans and prescription drug plans. Advantage plans allow Medicare benefits to be paid to providers through private health insurers. Traditionally Medicare allowed payments to go directly to any provider accepting Medicare reimbursements.

Medicare HMOs

HMOs that contract with the government through the Medicare Advantage program are called Medicare HMOs. Every month the HMO receives a set amount from the government for every Medicare patient enrolled with them. The sums received by the HMO are stipulated amounts for Medicare beneficiaries only. In some instances the patient may also pay a premium in addition to the stipend. This money is paid to the HMO regardless of whether the patient uses it for a medical issue.

Risks For Medicare HMOs

The risk for the HMO is the possibility that the stipend is not enough to cover medical costs for a patient. This can cause the HMO to lose money, hence, the close following of a health plans guidelines. Special care can be subject to approval and directed only through the HMO's approved physicians and providers. Time requirements may be enforced requiring a patient to be in a health plan for a certain period of time before a particular diagnosis can be treated.

Medicare Recipients

When joining a Medicare HMO, Medicare recipients are agreeing to receive all Medicare benefits through the HMO. The HMO is agreeing to cover all Medicare covered services. HMOs require all medical care to be approved by the physician before being received or paid for. If there is no record of prior approval neither the HMO or Medicare will pay for the services. Emergency services that occur outside the plan area will be paid for if the Medicare recipient follows the rules the HMO has set up for this type of payment issue.