HMOs are a type of health plan in the US that sets guidelines for doctors and limits treatments available. They offer lower costs by negotiating with providers and focusing on preventive care. Patients must choose a PCP who determines their care, with exceptions for emergencies and OB/GYNs. Critics argue that serious illnesses may go untreated.
A health maintenance organization (HMO) is a specific type of health plan in the United States. Unlike traditional health coverage, a health maintenance organization sets the guidelines under which doctors can operate and the restrictions under which healthcare professionals can use patients. On average, health coverage through the use of an HMO costs less than comparable traditional health insurance, with a trade-off of limitations on the range of treatments available.
History
HMO traces its roots to the early 20th century, when companies began offering their employees prepaid medical plans under which their care was treated as long as it fell within the scope of permissible procedures. This type of cover worked well throughout the mid-20th century, until its use began to decline in the late 1920s and early 1920s. In 1960, the United States Department of Health and Human Services passed the Health Maintenance Organization Act, which encouraged and sometimes required some companies to include HMOs among the health care options they offered their employees.
Costs for the patient
Patients who are members of health maintenance organizations incur certain costs in addition to the insurance premiums they pay. They usually have to pay small fees when using certain services. Also, if a patient chooses to use a healthcare provider or specialist who is not contracted with the HMO – an “out-of-network” provider instead of an “in-network” provider – the patient must pay the full cost himself or herself.
Reduced prices
The ways in which a health maintenance organization can offer more affordable health care are twofold. First, by contracting with specific health care providers and treating large numbers of patients, an HMO is able to negotiate lower prices than patients would otherwise have to pay. Second, by eliminating insurance coverage for treatments that the HMO deems unnecessary and focusing on preventive health care with an eye to the long-term health of its members, the HMO is able to reduce its costs.
Using the plan
When a person joins a health maintenance organization, they are usually asked to choose a general practitioner (PCP). This doctor then acts in part as an agent of the HMO in determining what treatments the patient needs. When the primary care physician determines that the patient needs care that the PCP cannot provide, he or she will refer the patient to a specialist who can address the patient’s health care needs. For example, a patient experiencing chronic foot pain might be referred to a podiatrist, or a patient experiencing recurring chest pain might be referred to a heart health specialist. Emergency visits are of course exempt from this limitation of referral and, in many cases, women can choose their own obstetrician/gynecologist (OB/GYN).
pros and cons
The long-term benefits of health maintenance organizations are the subject of much debate. Proponents point out that HMOs offer low-cost health care to people who might otherwise be uninsured. Critics argue that because restrictions are placed on treatments and doctors are encouraged to avoid referring patients whenever possible, the result is that many serious illnesses and medical conditions go untreated.
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