HMO

What is an HMO?

An HMO is a type of Medicare Advantage Plan offered by private insurance. It stands for Health Maintenance Organization and focuses on prevention and coordinated care using a primary care physician (PCP).

The PCP coordinates members’ care with in-network specialists, so members must receive a PCP’s referral to see any specialist. Out-of-network care generally isn’t covered, except in emergencies and other special cases.

That means coverage is limited to specific providers.Many employers offer HMO plans as part of their fringe benefits packages. Not only are health benefits an essential safeguard for employees, but also a potential draw when you want to recruit new talent.

What do HMO plans cover?

Most HMO plans cover care and services from in-network primary care physicians, specialists, hospitals, clinics, and pharmacies. The care providers under HMO plans either work for or are contracted with the HMO.

There are a few key things to consider when it comes to offering HMO plans as part of your employee benefits and wellness package:

• Some plans may require members to live or work in specific service areas.
• Healthcare services generally require a referral or prior approval from an in-network PCP.
• If patients receive care outside the network, services may not be covered.

HMO insurance exceptions

As with any offered employee compensation, it’s important to be clear on policy caveats or exceptions. Though out-of-network care is not covered under an HMO, there may be exceptions to this rule, such as the following:

• The patient experiences a life-threatening situation that requires emergency care.
• A provider is unavailable for the specific type of care an individual needs. These cases are rare, but if the HMO does not have the right physician or services, your employee can work with the HMO to find out-of-network care.
• An employee transitions to an HMO amid a treatment plan not covered under the HMO. The HMO can evaluate their case and determine whether they can finish treatment with their current provider.

How does an HMO work?

If you’re a member of an HMO, then for a monthly (or annual) fee, the Health Maintenance Organization can provide health coverage through a list of healthcare providers such as doctors or hospitals.

Additionally, you get access to a primary care physician, which gives you a one-on-one relationship with a “main doctor.” That means you have a medical professional with a more personalized understanding of your health. It’s this doctor who will refer you for other services.

That can be a huge benefit, but if you visit a specialist without your PCP’s referral, you may be unable to claim anything back, unless it’s a provable emergency or exempt situation.

What is the purpose of a Health Maintenance Organization?

A Health Maintenance Organization aims to provide integrated and preventative care while keeping costs low. HMOs rely on in-network physicians to refer their patients to the right specialists and receive the well-rounded care they need.

An HMO would rather spend a small amount of money upfront to prevent an illness than manage large costs later to treat the illness. That could mean proactive and preventative treatment reduces the impact of medical leave on your day-to-day operations, too.

Because an HMO can guarantee a certain level of patient volume, they can secure discounts on costs, meaning that they come with lower premiums and, in some cases, a more personalised experience due to the dedicated PCP.

Who is eligible for HMO Insurance?

An individual must live in the plan’s service area to be eligible for HMO insurance. Employees may also be eligible if their employer offers HMO plans as part of the company’s healthcare benefits.

HMO vs. PPO: Which is better?

Choosing whether an HMO or Preferred Provider Organization (PPO) is more beneficial to you depends on your needs. Things to consider include:

• Your plan member’s health
• The degree of flexibility you want in selecting doctors/healthcare facilities
• Any budget considerations.

Compared to an HMO, choosing a PPO allows more flexibility in doctors and facilities than HMOs.

That means PPO members have more options, as they don’t require a PCP’s (Primary Care Physician) referral to visit any specialists. Your members can also visit out-of-network health providers, with the caveat that it comes with a higher cost. PPOs themselves tend to be more expensive, with higher deductibles or copayments.

Here’s a simple breakdown of PPO vs. HMO:

PPO:

• Does not require a primary care physician.
• Members may select any doctor, even one who is out-of-network (at a higher cost).
• There is no need to get a referral to see a specialist.
• Members may need to submit an insurance claim for out-of-network care.
• The plan costs are generally higher.

HMO:

• A primary care physician coordinates all healthcare decisions and makes referrals to specialists and for hospital visits (except in the case of an emergency).
• Members are not required to file claims since the insurance company pays the provider directly.
• The costs are generally more affordable than PPOs.
• Members have limited choices compared to PPO members when it comes to selecting physicians and hospitals.

When deciding between the two plans, it comes down to the greater flexibility of a PPO plan versus the lower cost of an HMO plan.

What is the difference between HMO and traditional health insurance?

There are three key differences between an HMO and traditional health insurance.

Access to care

While an HMO usually provides coverage for specific healthcare providers, a traditional health insurance plan (also known as indemnity or fee-for-service) generally allows a member to obtain treatment from any medical provider.

Cost

HMOs are typically cheaper than traditional healthcare plans, providing lower premiums and out-of-pocket costs. Traditional insurance plans simply agree to pay a certain percentage of an employee’s healthcare costs. The employee is then responsible for paying the balance. The percentage depends on the type of plan the individual applies for.

Referrals

Someone under an HMO plan cannot refer themselves to a specialist, while someone with traditional insurance can. For example, if an employee under an HMO wakes up one day unable to move their foot, they cannot make an appointment with an orthopedic specialist. Their PCP must authorize and refer them to a specialist. An HMO plan requires a designated PCP to serve as a patient’s first point of contact for all healthcare needs.

What is the main advantage of an HMO?

The most significant advantage   of an   HMO   is   its affordability.  An HMO is especially cost-effective for people who only need basic medical care such as annual checkups and immunizations.

In addition to lower costs, there are other advantages of an HMO:

• HMOs in almost every part of the US have large networks of doctors, including specialists.
• HMOs often honor the networks of associated plans (such as plans run by the same insurance carrier in other states). Members who travel can call the plan to ask about in-network care on the road.
• There are no restrictions on the number of primary care visits.
• Drug costs are kept low (generally requiring only a small co-payment), and generic and brand name drugs are available.
• Usually, patients won't be required to submit claims to the insurance company.
• They offer an appeal process if a claim is denied.

What are the disadvantages of HMOs?

When thinking about the benefitsyour company will offer, there are many things to consider and boxes to check. That’s why it’s important to stay in the know and make an informed decision on what to offer your employees.

Here are some disadvantages of HMOs to bear in mind:

• Patients will only get insurance coverage if they visit an in-network physician and facility.
• If a primary care physician leaves the network, patients will need to change doctors.
• Patients must get a referral from their primary care physician before seeing a specialist (unless it’s an emergency).