Medical Coverage Plans

Health Maintenance Organizations (HMOs)

HMOs, unlike fee-for-service plans, provide a restricted managed care plan for their members. The

most noticeable approach is that these programs try to keep their members within specific doctors,

locations, and networks. Members are penalized in terms of denied coverage if they go outside the

approved network.

HMOs are popular with employers because they are cost-manageable, and premiums are

straightforward for employees. One price is paid a month and generally services as needed are

provided. Patients usually get charged a $5 to $20 copayment for visits, but that’s about it. Most

treatments and care costs are borne by the insurer, including testing, rehabilitation, hospital care,

physician treatment, and radiation. These systems are not entirely walled off; in an emergency a

member could go to a non-network medical provider. However, the patient may end up having to pay

out-of-pocket at first with costs reviewed and reimbursed after the fact.

An HMO revenue stream is flat; monthly set premiums are the one source of income. As a result, HMOs

have to operate in terms of prevention to keep care costs down. This means there is a heavy emphasis

in the HMO managed care plan for well-being, improved lifestyle education, and bad health avoidance.

There is also an increased emphasis on visits and vaccinations to avoid costly problems later.

HMOs tend to avoid the need for authorization forms because most of the program is already

established with protocols followed by the network providers. As a result, there is little need for

permission forms; instead, patients use some form of a network identification card when they visit a

network provider. Once swiped or entered, the patient’s network file comes up with all the relevant

information which is then migrated into scheduling, treatment and visit review, and subsequent

documentation of results.

There is some selection provided to members as to who and where their doctor can be, but this is

limited to the network population of providers. For urban areas the choices tend to be plentiful. It is the

rural members who can frequently find it much harder to choose a decent provider with very limited

options. Many HMOs have curtailed their rural territories due to insufficient profits.

Unfortunately, HMOs don’t provide any kind of scoring or reference system for their network providers

that patients can rely on. As a result, there are only two ways to learn: trial and error; and personal

referrals. Asking around with those you know are with the same insurer can eventually get you to a

good doctor. One quick sign is to figure out which doctors have a high popularity for patients. Those that

don’t have waiting lists usually are not popular for a reason. Don’t rely on the HMO to assign you a

doctor; many times they will automatically place you with one that has the least amount of patients

which usually means you get stuck with the provider who has the worst bed-side manner.