The term "Health Maintenance Organization (HMO)" has been used frequently for many years. However, the definition of an HMO and what it means to people have changed a lot. The original idea for an HMO was a health organization that helps you to stay well instead of just treating you when you get sick. In recent years, critics have said that some HMOs now focus more on cutting costs than improving health. Some HMOs have responded to this criticism by lifting some cost constraints and focusing more on the original idea of promoting health.
Traditionally, an HMO: had a network of providers; required members to select a "Primary Care Physician (PHP)" from the network as a gatekeeper; provided complete coverage for a comprehensive range of services provided or referred by network providers; did not cover services by out-of-network providers without referral from a network provider or a medical emergency; emphasized preventing illness and providing continuity of care; and encouraged network providers to manage care and control costs. A "Gatekeeper" coordinates the member's care; and generally the member only receives coverage for specialist or additional services if referred by the gatekeeper. In some plans, the enrollee is responsible for pre-admission certification or second surgical option in order to be covered for non-emergent out-of-network services.
In recent years, several aspects of this traditional definition of an HMO have changed. For example, some HMOs now allow access to specialists without referral from a gatekeeper. "Open HMOs" (also called "Wrap Around HMOs" or "Point of Service" POS Plans) are now providing some coverage with copays for non-emergent services by providers outside the network without a referral.
Most HMOs still require you to choose a primary care physician (usually a family physician, internist, obstetrician-gynecologist, or pediatrician) from their network. This means that you might have to change physicians if your current physician does not belong to the HMO. Physicians in an HMO network may be salaried physicians employed by the HMO ("Staff Model"), closely-associated group practices with a high percentage of HMO patients in their practices ("Group Model"), or independent practices with whom the HMO has contracted ("IPA"). Both staff and group-model HMOs are called "Prepaid Group Practices (PGPs)" and generally involve physicians working together at one or more common locations.
An "Individual Practice Association (IPA)" is made up of individual physicians and/or small groups of physicians in private practice in different locations who collectively contract with an HMO to care for HMO patients. The insuring part of the IPA contracts with the providers for care for the plan enrollees. Traditionally, IPA providers have been paid on a fee-for-service basis with a percentage of their fees withheld during the year. The withheld amount is refunded at the end of the year if costs are held down. IPA physicians see non-HMO patients and frequently have arrangements with more than one HMO. You are less likely to have to switch physicians to join an IPA model HMO than a staff or group model HMO.
One advantage of HMOs is that they are generally less expensive than open-ended Fee-For-Service plans because costs are controlled by network providers. A second advantage is that HMOs generally provide good coverage for "preventive care" (such as annual check-ups, flu shots, and hearing tests) that helps to keep you well. A third advantage of HMOs is that members generally just carry a card and do not have to worry about paperwork such as submitting bills. The main disadvantages of an HMO are limitations on your choice of provider and limitations on what services are covered. However, as HMOs continue to evolve, the advantages and disadvantages of tomorrow's HMOs might be different than those of today's HMOs.
