One of the many difficult decisions you make as an adult is determining which health insurance plan is best for you and your family. Purchasing health insurance can be an intimidating and often daunting process. Over the past 20 years, managed healthcare plans called HMOs, have become commonplace.
In fact, some 70 million Americans currently use some form of an HMO for their healthcare. HMO is an acronym for health maintenance organization. An HMO insurance plan limits access to certain physicians and hospitals, often requires referrals, and frequently has deductibles. Many employers now only offer HMO plans due to their lower cost. With several different HMO models to choose from, HMO insurance plans have become a favorite choice.
Are you considering an HMO for your healthcare services? Wondering which HMO plan would work best for you and your family? Read on to learn more about the different types of HMO models available, as well as the pros and cons of selecting HMO for your healthcare coverage.
What Are HMOs?
A health maintenance organization or an HMO is a type of managed health care. HMO plans require its users to get medical services from a network of providers and hospitals that are specifically contracted with the HMO plan. Members in HMO plans choose a primary care physician that is seen on a regular basis and helps to coordinate care with specialists and other providers. HMOs tend to focus on wellness, prevention, and integrated care.
Physicians and hospitals that are contracted with the HMO insurance plan are called in network providers. In-network providers know what services the insurer covers and how much they will pay. The provider agrees to provide those services at the pre-established, or contracted rate. Usually, a referral from a primary care physician (PCP) is required before scheduling with a specialist provider.
Types of HMO Models
Now that you understand how HMOs work, let’s take a closer look at some options. There are several different models of HMOs a provider may choose to participate in.
There are four different types of HMO models:
- Staff Model
- Group Model
- Open-Panel Model
- Network Model
Keep reading to learn more!
Staff Model
In the staff HMO model, physicians and other healthcare providers are employees of the HMO and work in a facility owned by the HMO.
In the staff HMO model, patients can only see healthcare providers who are also in this HMO. In order for a patient to see one of these providers, they would need to sign up for the particular HMO that employs the healthcare provider.
Group Model
The group model is another type of HMO model. In this type of HMO, the physician and other healthcare workers are not directly employed by the HMO. Instead, these providers are part of a private medical group, which may consist of several independent practices. The group is contracted by the HMO for a predetermined amount of money. The private practices determine how the fees paid by the HMO are divided among the providers.
Open-Panel Model
Another HMO model is the open-panel model. Like the group model, in the open-panel model the HMO employs a group of physicians who work from their individual private practices.
Some of the practices are like the group model and can only see patients who’ve signed up for the HMO. Others are independent physicians. The providers in the open-panel model can see patients from the HMO in addition to patients who aren’t a part of the HMO. Though providers can refer patients to both in and out of network providers, most providers choose to refer to physicians and hospitals that are in network with the HMO. Referring a patient to an out of network provider often results in higher out of pocket costs for the patient.
Network Model
The newest HMO model is the network model. The network HMO is the newest and most popular model. The network model is a combination of the group and the open-panel model.
In the network model, the HMO employs:
- Multi-specialty physician group practices
- Independent practice associations
- Fully independent physicians
Patients are encouraged to see their in-network provider. However, they can also get referred to see providers that are not part of the HMO network.
HMO Pros and Cons
| HMO Pros | HMO Cons |
|---|---|
| Access to primary care physicians | Limited out-of-network options |
| More cost-effective | More difficult to see a specialist |
| Lower deductibles | May need to switch to a new PCP |
| Easier claims and billing | Preauthorizations and referrals required |
HMO Pros
There are a number of reasons to consider signing up for an HMO. Let’s take a closer look at the benefits of using an HMO for your healthcare.
Access to Primary Care Physicians
Once you enroll in a HMO insurance plan, you will be asked to select a primary care physician. Your primary care physician becomes your first stop for all your healthcare needs
Having the same PCP provides continuity of care. Your physician has the opportunity to know you as a person and understand your medical background. Having a strong relationship with your primary care doctor helps to guide your medical decisions and maximize your health.
Patient-focused care is a significant reason why patients enroll in an HMO insurance plan.
More Cost-Effective
Another reason why patients choose HMO insurance plans is due to their lower cost. HMO plans are typically more cost-effective for patients and employers than other types of insurance. HMOs are able to keep their costs down by limiting care to in-network providers.
The HMO administrators negotiate lower prices with providers. The providers are willing to agree to the lower price point because they know it brings in more patients who are a part of the HMO.
Easier Claims and Billing
Another advantage of an HMO plan is simpler claims and billing. Since the HMO physicians have contracted rates with the HMO insurance company, patients are not required to complete claim forms.
Also, patients are able to determine what services will be covered as well as the cost ahead of time.
HMO Cons
There are several disadvantages of an HMO plan. Here are some of the drawbacks associated with an HMO insurance plan.
Limited Out-of-Network Options
Limiting the number of in-network providers is cost-effective for the HMO insurance company. Though you can choose your doctor or hospital, care is based on the local HMO coverage agreements.
With an HMO plan, when you see an out-of-network provider, you will pay more money out-of-pocket for the same care. If you are a person who travels often, or spends extended periods of time in other places, then this could be an issue for you.
However, most HMOs will allow for out of network providers in the event of a medical emergency.
More Difficult to See a Specialist
Another drawback of HMO plans is restricted access to specialist providers. You can’t make an appointment with a specialist on your own. A referral from your primary care provider is needed prior to seeking care from a specialist. Without a referral, your out of pocket expenses will be higher.
However, each hMO has varying rules on referrals, so you should check your plan details before opting to see a specialist without a referral from your primary care physician.
Change of Doctor
Remember, in an HMO model, you must see a doctor who is part of the HMO network. If you already are seeing a doctor with who you have a relationship, you may be unhappy if you need to switch to a different provider when enrolling in an HMO plan. Only primary care physicians that are in network with the HMO insurance can be used.
If you continue to see your out-of-network provider, you will pay expensive out of network provider fees. By limiting the number of providers available, HMOs keep their rates down for both the patient and employer.
Preauthorizations Required
In addition to requiring referrals, most HMO plans require precertification or prior authorization for diagnostic studies. CT scans, MRIs and cardiac test are examples of diagnostic studies that would require precertification. This can cause a longer wait time for diagnostic and imaging studies while the insurance company validates the precertificaton.
Choose the HMO Model for Your Healthcare Needs
When comparing different HMO models, consider what plans are available and consider how often medical services are utilized. If you don’t frequently travel and can find a quality primary care physician in the network, an HMO can be the best insurance plan for you and your family for insurance coverage.
If you need assistance choosing an insurance plan that works for you, we can help. Contact us today to get more information on insurance options that will be the best fit for you.