Health Maintenance Organization (HMO) – All There Is To Know – Health Maintenance Organization (HMO)A health maintenance organization (HMO) is a type of health insurance plan that provides coverage for medical care through a network of doctors, hospitals, and other health care providers who are contracted by the HMO.
HMOs aim to control healthcare costs by limiting unnecessary services, requiring referrals from primary care providers (PCPs), and restricting coverage to in-network providers.
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How HMOs Work
When you enroll in an HMO plan, you must choose a PCP from the HMO’s network. Your PCP will be your main point of contact for your healthcare needs and will coordinate your care with other specialists and facilities within the network. You will need to get a referral from your PCP before you can see any specialist or receive any service that is not covered by your PCP. If you go to an out-of-network provider without a referral, the HMO will not pay for the service and you will have to pay the full cost yourself.
HMOs typically have lower premiums, deductibles, and copayments than other types of health insurance plans, but they also have less flexibility and choice. You may not be able to see your preferred doctor or hospital if they are not in the HMO’s network. You may also have to wait longer for appointments or referrals. However, some HMOs may offer more preventive care services, wellness programs, and disease management programs than other plans.
Types of HMOs
There are different types of HMOs that vary in their structure, organization, and payment methods. Some of the common types are:
- Staff model: The HMO employs its own doctors and other health care providers who work at the HMO’s facilities. The HMO pays them a salary and may offer them incentives or bonuses for meeting quality and cost goals.
- Group model: The HMO contracts with a large group practice of doctors and other health care providers who work at their own offices. The HMO pays them a fixed fee per member per month (capitation) regardless of how many services they provide.
- Network model: The HMO contracts with multiple group practices and individual providers who work at different locations. The HMO pays them either a capitation fee or a fee-for-service depending on the contract.
- Independent practice association (IPA) model: The HMO contracts with an IPA, which is an organization of independent doctors and other health care providers who agree to provide services to the HMO’s members. The IPA negotiates the payment rates and terms with the HMO and pays its providers either a capitation fee or a fee-for-service depending on the contract.
Coverage
HMOs are required to cover certain essential health benefits under the Affordable Care Act (ACA), such as:
- Ambulatory patient services
- Emergency services
- Hospitalization
- Maternity and newborn care
- Mental health and substance use disorder services
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care
However, each HMO may have different rules, limits, and exclusions for these benefits. For example, some HMOs may require prior authorization, copayments, or coinsurance for certain services or drugs. Some HMOs may also offer additional benefits that are not required by the ACA, such as dental, vision, or hearing care.
You should always check your plan’s summary of benefits and coverage (SBC) before enrolling in an HMO to understand what is covered and what is not covered by your plan.
Significance
HMOs are one of the most common types of health insurance plans in the United States. According to the Kaiser Family Foundation, about 31% of workers who had employer-sponsored health insurance in 2020 were enrolled in an HMO plan. HMOs are also available through the Health Insurance Marketplace, Medicare Advantage, Medicaid Managed Care, and other public programs.
HMOs can be beneficial for people who want to save money on their health insurance premiums and out-of-pocket costs, who do not mind having a limited choice of providers, and who value preventive care and coordinated care. However, HMOs can also be disadvantageous for people who want more flexibility and choice in their healthcare decisions, who need frequent or specialized care that is not available in their network, or who travel frequently outside their service area.
Advantages and Disadvantages of HMOs
HMOs have some advantages and disadvantages compared to other types of health insurance plans. Here are some of the main pros and cons of HMOs:
| Advantages | Disadvantages |
|---|---|
| Lower premiums, deductibles, and copayments than other plans | Limited choice of providers and facilities within the network |
| Less paperwork and hassle for members | Need for referrals from PCP for specialty care and services |
| One doctor coordinates and manages your care | No coverage for out-of-network care except for emergencies |
| More preventive care services, wellness programs, and disease management programs than other plans | Possible delays or denials for appointments or referrals |
How to Choose an HMO Plan
Choosing an HMO plan can be a difficult decision, as there are many factors to consider. Here are some steps you can take to help you choose an HMO plan that suits your needs and preferences:
- Compare the cost of premiums, deductibles, copayments, and coinsurance for each HMO plan you are considering. You can use the Health Insurance Marketplace website or other online tools to compare different plans and see how much you would pay for each one. You should also check if you qualify for any subsidies or tax credits that can lower your costs.
- Check the network of providers and facilities that each HMO plan covers. You can use the plan’s website or call the customer service number to find out which doctors, hospitals, labs, pharmacies, and other healthcare providers are in the network. You should also check if your current providers are in the network or if you would have to switch to a new PCP or specialist.
- Review the benefits and services that each HMO plan offers. You should check what types of preventive care, wellness programs, disease management programs, prescription drugs, and other services are covered by each plan. You should also check what limits, exclusions and prior authorization requirements apply to these benefits and services.
- Consider your health care needs and preferences. You should think about how often you see a doctor, what medical services you may need in the future, and whether you have any existing conditions that require specialized care. You should also decide if you want more flexibility or lower costs, and if you want to have your own PCP or not.
- Ask for help if you need it. You can contact a licensed insurance agent or broker, a navigator or assistant, or a state health insurance assistance program (SHIP) to get more information and guidance on choosing an HMO plan. You can also talk to your friends, family members, or coworkers who have experience with HMO plans and get their opinions and recommendations.
How to Use Your HMO Plan Effectively
Using your HMO plan effectively can help you save money, get quality care and avoid unnecessary hassles. Here are some tips on how to use your HMO plan effectively:
- Stay in the network. Use the plan’s website, app, or customer service number to find out which doctors, specialists, hospitals, labs, pharmacies, and other healthcare providers are in your plan’s network. You should always use in-network providers to get coverage unless it’s an emergency.
- See your PCP first. Your PCP is the doctor who coordinates and manages your health care. You should see your PCP for preventive care, routine care, and follow-up care. Your PCP will also refer you to specialists or other services when needed.
- Get a referral. Before you see a specialist or get any service that is not covered by your PCP, you need to get a referral from your PCP. A referral is a written or electronic authorization from your PCP that allows you to see another provider or get another service. Without a referral, the HMO will not pay for the service and you will have to pay the full cost yourself.
- Act fast in an emergency. If you have a serious or life-threatening injury or illness, you should call 911 or go to the nearest emergency room right away. You do not need a referral from your PCP for emergency care. The HMO will cover emergency care anywhere, even if it’s out of network. However, you should tell your PCP about your emergency visit as soon as possible, so they can arrange follow-up care if needed.
How to File a Complaint or Appeal with Your HMO
If you are unhappy with your HMO plan, you have the right to file a complaint or appeal with your HMO or with an external agency. A complaint is an expression of dissatisfaction with any aspect of the HMO’s operations, activities, or behavior, such as problems with access, quality, customer service, or billing. An appeal is a request for the HMO to review and change a decision it made about your coverage, benefits, or services, such as denial, reduction, or termination of care.
Here are some steps you can take to file a complaint or appeal with your HMO:
- Contact your HMO. You should first try to resolve your issue by contacting your HMO’s customer service department by phone, mail, or online. You should explain your problem clearly and provide any relevant information or documents. You should also ask for the HMO’s grievance and appeal procedures and follow them carefully. You should file your complaint or appeal within the time limit specified by your HMO, which is usually 60 days from the date of the incident or decision.
- Wait for the HMO’s response. Your HMO should acknowledge your complaint or appeal and investigate it thoroughly. Your HMO should notify you of its decision in writing within a reasonable time frame, which is usually 30 days for standard complaints and appeals and 72 hours for urgent complaints and appeals. Your HMO should also inform you of your rights to request an external review or file a complaint with a state or federal agency if you are not satisfied with its decision.
- Request an external review. If you disagree with your HMO’s decision on your appeal, you may request an external review by an independent third party, such as a Beneficiary Family Centered Care – Quality Improvement Organization (BFCC-QIO) for Medicare plans, a state department of insurance for non-Medicare plans, or an independent medical review organization for quality of care issues. You should follow the instructions provided by your HMO on how to request an external review and submit any required information or documents within the time limit specified by your HMO, which is usually 60 days from the date of the decision. The external reviewer will review your case and issue a binding decision within a reasonable time frame, which is usually 45 days for standard reviews and 72 hours for expedited reviews.
- File a complaint with a state or federal agency. If you are still unhappy with the outcome of your complaint or appeal, you may file a complaint with a state or federal agency that oversees your HMO, such as the Centers for Medicare & Medicaid Services (CMS) for Medicare plans, the Department of Health and Human Services (HHS) for civil rights, health information privacy or provider conscience issues, the Food and Drug Administration (FDA) for clinical trials or pet food issues, or the Office of Inspector General (OIG) for fraud, waste or abuse issues. You should contact the appropriate agency and follow its complaint procedures and time limits.
Health Maintenance Organization (HMO)