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Health Maintenance Organization (HMO) - An Overview

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Health Maintenance Organization (HMO)

Some Useful Information on Health Maintenance Organization (HMO)

Gone are the days of traditional coverage when people would have to pay heavily even to get basic benefits. Today, United States has a type of managed care plan that offers a range of benefits at a price that seems affordable to most people. Health Maintenance Organization (HMO) plans have certain basic characteristics that render them different from traditional indemnity coverage. Under HMO plans, doctors are given strict guidelines with regards to their operations and they have to abide by them at all given circumstances. But do note that the range of benefits may not be all that extensive as far as a Health Maintenance Organization plan goes.

The roots of HMO in managed care treatment are deep rooted in America, going back to the earlier half of the 20th century. This category of health plans became most popular when people began to avail medical and hospital services on the basis of prepayment. As per guidelines, they would not be able to avail services beyond the stated set. Sadly, during the decades of the 60’s and 70’s saw a decline in the popularity of HMO, which swung back to normal in 1973 when the HMO Act was passed. Ever since, United States has taken to the HMO concept liberally and regards the same as one of the most trusted varieties of health coverage.

The highlight of HMO is the fact that it helps members cut on costs. The process necessarily fits into a two- tier structure. Firstly, HMO’s negotiate rates with providers so that members can access the best of healthcare at the lowest of rates. Secondly, they put limits on the kinds of healthcare members can avail. The latter is done so that plans do not comprise unnecessary advantages that members can actually do without. Keeping benefits within a limit ensures the cost of healthcare remains within the reach of millions.

Members of an HMO plan too have to perform within a few set guidelines. A compulsory aspect for HMO plan members is to choose a Primary Care Physician (PCP). The PCP is somewhat like a personal doctor who assists to a great extent when the member takes important health decisions. This individual also decides the kind of healthcare the members needs and doesn’t need. Depending upon a member’s health requirements, the PCP gives him referrals to various specialists within the given network. In certain cases, policyholders do not need to take referrals from their PCP’s as long as they’re availing medical within the given provider network.

Before one chooses to opt for an HMO plan, one must know the types available today. First comes the staff model HMO where physicians are intricately connected to the organization. In fact, in this case, the Health Maintenance Organization employs the physicians directly. In the second type, that is, a group model HMO, the organization initiates a negotiation with physicians from a community. This is less flexible because these communities are necessarily closed to other physicians. The Independent Practice Association (IPA) model gives leverage to physicians where the latter get in touch with IPA’s that in turn establishes contact with an HMO. The last type is the network model where physicians work with a number of other providers. A physician’s activities are not restricted in this case.


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