Health Maintenance Organizations (HMOs)
Candlefocus EditorTypically, to be eligible for coverage, HMOs are operated by for-profit insurance plans with a contractual agreement or network of providers that individuals must use for care. This network of providers is known as the Primary Care Physician (PCP). Generally, any health care services provided outside of the PCP must be pre-approved by the patient’s insurance company. This means that only certain specialists and hospitals are covered by health plans or approved by the patient’s primary care physician.
An additional benefit associated with the HMO model is their emphasis in managing and preventing illness, while promoting good health and lifestyle habits. Services such as cancer screenings, preventive care and health education are routinely provided to a variety of age groups.
HMOs also are a popular option as they generally have lower out of pocket insurance costs. This can be an attractive feature for those with low and moderate incomes. Furthermore, HMOs generally require little, if any, paperwork. Contracts are clear and out-of-pocket expenses generally do not exceed a predefined limit.
There are a few drawbacks associated with HMOs, primarily the lack of flexibility associated with seeking health care services outside the HMO’s provider network. In cases where services are received from out-of-network providers, patients will incur all of the associated costs. Furthermore, HMOs may require prior authorization for certain tests, procedures and medications as well as referrals for specialists.
Despite the few drawbacks, HMOs remain an attractive option for a wide range of consumers. By offering low premiums and out of pocket expenses that are typically limited, HMOs are a popular choice among individuals and families who may not have otherwise been able to afford health insurance.