Health Mantainence Organizations are composed of two separate parts. The first part is the plan itself which designs the benefits, administrates the plans and collects premiums; then disburses capitation fees to doctors or medical groups and pays claims on non capitated benefits. The second part is the providers who are contracted by the plan to provide services for outpatient and inpatient services. These contractors are either medical groups or groups of private practice physicians under an IPA (Independent Practice Association) usually formed through a hospital affiliation.
The contractual arrangement with providers fixes some of the costs associated with medical plans through the capitation and contracts with hospitals and other providers. For the capitation fees the doctors and medical groups assume some of the risk in cost of services. The major goal of this arrangement is to contain medical costs while providing adequate services, this should lower the ultimate costs to individuals buying policies or corporations providing benefits to employees.
HMO’s provide for the least outlay of expenses for medical care by the covered persons using a system of copayments for office visits (which usually includes services such as lab other service). Hospital services are paid in full, have a fixed dollar or % copayment. Prescriptions are paid with a copayment and overall outlays are fixed by an out of pocket stop loss. HMO’s normally have no lifetime maximum. Expenses for emergencies or out of the area services are also covered by the plan.
When purchasing an HMO one consideration is from whom will I get my medical care from. The providers available are those contracted by the plan, whether private practice doctors or medical groups as well as hospitals and other types of providers. Once a provider is chosen most plans will allow changes should you not be happy with the provider, move out of the area or the provider is no longer contracted. In some cases doctors offices may be closed to new patients unless that patient was formally seen by the provider.
HMO’s have been shown to contain cost, and thereby usually are more affordable than other types of plans. The trade offs in this type of plan are more benefits and lower costs verses less choices as to providers and more systematized style of receiving care. Favorable changes in the way plans are set up, and operate have come about as these plans have grown. One change is being able to access specialist treatment without referral.