You visit the hospital, and you fill forms about your HMO. You pay premiums to an HMO and don't think more of it. But there's a lot more to an HMO. What is it?
You will learn what an HMO is, the history of an HMO, what it offers, how it came to be, its demerits, and the 5 largest HMOs operating in the United States. You will also learn how to sign up for an HMO and how it is different from other health insurance plans.
A Health Maintenance Organization (HMO) is a type of insurance company that provides coverage within a predetermined network of healthcare providers to its members. It does this by providing a list of healthcare professionals, doctors, hospitals, and facilities for members to visit at less than the "market price."
The information in this article has been collated from trusted sources such as the Library of Congress, the HMO Act, various HMOs operating in the US, and health industry experts.
What Exactly Is An HMO?
The acronym HMO stands for Health Maintenance Organization. Some people interchange HMO Insurance and HMO. An HMO is loosely one of the three forms of managed healthcare plan. The others are Point of Services POS and Preferred Provider Organization PPO.
Health Maintenance Organizations were created to bring healthcare providers together to create a network. This healthcare provider network includes hospitals, doctors, pharmacies, clinics, x-ray centers, medical equipment makers, and pathology labs.
This collection of healthcare providers have agreed to accept a set amount as payment for their services. Since HMOs are large organizations, they can negotiate lower healthcare costs with providers, a cost-saving method that helps the policyholders.
Policyholders may also be eligible for discounts when they use services from a network healthcare facility or professional.
Typically, when a healthcare provider joins an HMO network, there are set guidelines and rules they have to follow. For instance, California legally requires HMO patients to see a physician no later than ten working days after scheduling an appointment.
Are HMOs A Relatively New Invention?
HMOs aren't a novel concept. The Idea of an HMO dates back to the '30s. Organizations that functioned as today's HMOs do were first created in Oklahoma, Oregon, Washington, and California. All modern HMOs have Dr. Sidney Garfield and Henry Kaiser to thank as they were the pioneers.
Kaiser and Garfield advertised the Kaiser Permanent Healthcare Program. And by the height of World War 2, the plan had about 100,000 members in California and Oregon.
Organized Medicine Resisted The Change
When HMOs were in their early days, the AMA or American Medical Association provided stiff resistance to the idea. The association feared that such a novel concept would spell doom for the quality of medical care.
Medical associations in several states were able to lobby legislatures to ban HMOs. Medical practitioners willingly participating in such programs were ostracized by their county and state medical societies.
Fortunately, the resistance was overcome. This was signified in the 1970s when conservative politicians had switched sides in the argument. HMOs were being seen as socialized medicine's alternative.
This effort was further cemented in 1973, when the US Congress Passed HOMA or the Health Maintenance Organization Act, formally establishing the guidelines in which HMOs could operate within. The HOMA led to a rapid increase in the number of HMOs in existence.
What Sets A HMO Plan Apart From Other Healthcare Plans?
Two factors distinguish HMOs from other healthcare plans. They are choice and cost.
With an HMO, you select your primary care doctor from your HMO's network of healthcare providers within your vicinity. This doctor is the one you visit when you require medical care. Your primary care doctor would have more insight into your general health, and it would be their duty to coordinate additional care, should you require it.
This means, to visit a specialist, you would have to see your primary care doctor first to get a referral. You will then be referred to a specialist within your HMO's network.
For instance, if you have chest pains, your primary care doctor would first examine you. If they determine you require the services of a specialist, then you would be referred to a specialist within the network for care.
Given that the specialist is approved by your HMO's network, your care would be covered by your health insurance once you meet your deductible and make your copay.
Due to having a pre-agreed payment level, your HMO would generally offer lower premiums compared to other insurance firms. HMOs, typically also have lower coinsurance and copays, which make them a tad more affordable.
HMOs can be a great option for individuals that don't require more than basic healthcare, such as immunizations and annual checkups. Nevertheless, while HMO-associated costs are generally lower, they don't cover non-network care, except in the case of an emergency.
How Does Having An HMO Plan Work?
Let's use "Adam" as an example. Adam makes an appointment with his primary care doctor. A primary care doctor here could mean a general practitioner, pediatrician, family physician, or even a gynecologist.
With an HMO plan, Adam can select his primary healthcare doctor. That doctor now coordinates and manages Adam's healthcare. During the visit, Adam is examined, and if tests are needed, the doctor refers Adam to an x-ray center or a path lab. Depending on Adam's medical condition, his primary care doctor could refer a specialist.
You should remember that every healthcare provider the doctor refers Adam to belongs to the same HMO network. If Adam decided to see a doctor that isn't part of the network, then Adam will have to foot the entire medical bill.
There are exceptions, however. The first is in an emergency. Adam can go to any healthcare provider in or outside the HMO's network if suddenly, he has a health crisis.
Additionally, some HMO plans can let Adam get out of network care. In this case, Adam would still have to pay a larger part of his medical bill.
Should I Get An HMO Plan?
There are numerous factors to bear in mind when considering an HMO health insurance plan. A few of these factors are:
- Out of pocket costs
- Monthly premiums
- Health Needs
- Selecting your doctors and healthcare providers vs. using network approved ones
If you don't require much specialist healthcare or aren't too bothered about having a primary care doctor coordinate your healthcare, then an HMO plan can help save you money. If you'd like a health insurance plan that allows you more flexibility, Preferred Provider Organization (PPO) might be a viable close option.
If you're lucky, you may already live in a place that has most of the facilities registered under your insurance provider's HMO network. An HMO is also a great plan if you don't travel much.
How Do I Get An HMO Plan?
To get started, you can head to the Federal Marketplace or any state Marketplace to compare insurance plans from various HMOs. If you already have a particular HMO in mind, you can head to its website and follow the signup instructions.
One thing to remember when getting health insurance is that dental care isn't covered. To get dental care, you will need a stand alone dental plan. Fortunately, you can get dental insurance in HMO plans.
What Are The Demerits Of HMOs?
Quite a number of medical analysts and experts state that the entire HMO structure has numerous shortcomings. The major arguments usually put forward are:
- The HMO structure influences the location a medical practitioner chooses to practice in.
- It influences doctors' retirement decisions.
- The earning potential of specialists has been negatively affected, while the earning potential of general practitioners has risen.
- Primary care doctors have become de-facto gatekeepers, and some can restrict a patient's access to needed specialists
- The HMO structure has caused a shortage of general practitioners
- Patients face long waiting times, as much as ten days just to see a general practitioner
The Top 5 HMOs In America
Blue Cross Blue Shield Association
Blue Cross Blue Shield Association has a total membership of over 106 million members. This HMO was created by the merger of Blue Shield and Blue Cross Association back in 1982. It has a unique structure amongst HMOs in that it is a coalition of 36 unique health insurance companies operating in the US.
It offers private health coverage as well as health insurance policies under government plans across the US.
UnitedHealth Group Inc.
With a market value of about $156 billion, Minnesota-based UnitedHealth Group is the biggest American Health insurance provider by capitalization. The UnitedHealth Group has two subsidiaries that offer healthcare services and products. They are Optum and UnitedHealthcare.
This HMO also offers Medicare Advantage policies via its UnitedHealthcare Medicare Solutions arm. Its HMO policies provide the policyholder with access to care via a network of local hospitals and physicians.
A UnitedHealth Group HMO plan is comparatively lower than other network plans. It serves about 70 million people scattered around the US.
Anthem Inc is the third-largest HMO in America. Its current corporate makeup was formed as a result of WellPoint Health and Anthem Networks merging in 2004. This HMO provides insurance plans to over 39 million members.
Aetna is one of the older US-based HMOs in operation, having been founded in 1853. It reported $60 billion in revenue for 2020 and currently provides health insurance plans to over 24 million members.
CIGNA Corporation is the smallest of the Big 5. Providing accident, life, and health insurance services in the United States, Europe, and Asia, Cigna's current structure resulted from a merger between INA Corporation and Connecticut General Life Insurance Company in 1982.
Its Phoenix-based HMO is officially known as Cigna Medical Group and has a reported $38 billion revenue, providing health insurance plans to 16 million people.