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Information about all aspects of finances affected by a serious health condition. Includes income sources such as work, investments, and private and government disability programs, and expenses such as medical bills, and how to deal with financial problems.
Information about all aspects of health care from choosing a doctor and treatment, staying safe in a hospital, to end of life care. Includes how to obtain, choose and maximize health insurance policies.
Answers to your practical questions such as how to travel safely despite your health condition, how to avoid getting infected by a pet, and what to say or not say to an insurance company.


About HMOs

HMO (Health Maintenance Organization) is a generic term for any type of insurance plan or administrative procedure that attempts to direct the patient's treatment.

HMOs started in the mine fields of California as places where medical care, including preventive care, was provided by doctors employed by the HMO in HMO owned facilities. The HMO decided what care would be given. Most HMOs today are virtual HMOs. Care is provided by doctors and facilities that contract with the insurer.

Benefits provided by HMOs are extensive. HMOs have unique features and their own lingo.

Care in an HMO generally starts with a primary care physician who also acts as a gatekeeper to the rest of the system. Primary care physicians generally get paid on a "capitated" basis -- an amount of money per patient no matter how many or few services are provided. Since care is managed, provision of care (including appointments with specialists) generally needs to be pre-approved.  If care is denied, each HMO has an appeals process to follow.

Drugs are provided from a "formulary." There are generally different charges to the member (that's you in HMO lingo) depending on whether the drug is branded or generic.

There are pluses and minuses to HMOs compared to other types of health insurance.

HMOs are generally regulated by the state health department, rather than the insurance department.  In some states, HMOs are regulated jointly with the Department of Insurance. Protection in the form of a disclosure requirement and prohibition against discrimination is generally provided by the federal law known as ERISA. 

HMOs and People With Serious Or Chronic Health Condition

According to surveys, HMOs function very well for healthy people who have little or no need of a physician except for occasional minor ailments and preventive care. When you see the surveys that show 70 or 80% of HMO members are happy with their coverage, keep in mind that they are polling all HMO members and the vast majority of the happy members are members that didn't need to use the HMO at all.

Since the current design of HMOs includes pre-approval of most procedures and the requirement of substantial documentation for referrals to specialists, for people with a chronic or life-changing condition, HMOs can be frustrating and agonizingly slow in their delivery of care. However, good care is available in HMOs for people with chronic or life-changing conditions. This is particularly so for HMO members who are knowledgeable about their condition and available treatments and are willing to advocate assertively for care can receive excellent care within the HMO.  

How To Maximize Use Of An HMO:  As described more fully in How To Maximize Use Of An HMO:

  • Be an active patient.
  • Learn about  your plan - including t he concept behind an HMO and how your HMO works - including its parts and t eh wording. 
  • Choose a primary care doctor (gatekeeper) with care.
  • Choose specialists like an educated consumer.
  • Use in network doctors and other health care providers as much as possible.
  • If you want to use out of net work doctors and other health care providers, learn how to minimize the amount you have to pay.
  • Connect with case management.
  • If you think you need a second opinion, ask for one.
  • Take advantage of the mental health coverage in your plan. 
  • Learn what to do in the event of a medical emergency.
  • When a drug is prescribed, look for the alternative that is on the HMO's formulary and that has the least out-of-pocket expense.
  • Learn what to do if a drug or treatment you want is denied or if you have other complaints against the Insurer.
  • Get help dealing with the insurance company if you need it.
  • Carry your i.d. card with you in your wallet or purse.
  • If you want to change health plans, learn how to keep your doctor.
  • Keep in mind that insurance policies are not set in stone - negotiate.
  • If you don't get what you want, appeal. Appeal. And keep appealing.

Once you have it, do whatever you can to keep your health insurance.

To learn more, see:

NOTE: For information about HMOs in general, click here. 

To Learn More

How Does An HMO Work As A Practical Matter, From A Member's Point Of View?

Some HMOs provide care in their own facilities with employee health care providers.

Most HMOs provide care through setting up guidelines of health maintenance and care through contracts with health care providers and health facilities. Patients can only go to the doctors who have contracted with the HMO. Those doctors agree to follow the plan's guidelines of medical care for a set schedule of fees. Benefits Under An HMO,discusses the plan design more specifically.

Upon enrolling in an HMO, you choose a Primary Care Physician (PCP) from the insurer's Directory of Participating Providers. Most HMOs have put the list of their Participating Providers on line. (For information see: How To Choose A Primary Care Physician).

You pay your co-pay at the doctor's office at the time of service. If you need tests or x-rays, your PCP will perform them in his or her office or advise you where to go.

If you need to see a specialist, what happens depends on whether your plan insists that you get prior approval before seeing a specialist, or allows you to make an appointment without prior approval.

If prior approval is required, your PCP will request it for you. If your HMO requires prior approval to see a specialist, ask the PCP to get you an unlimited pass to see a specialist, or at least a multiple number of times.

Generally, your PCP will suggest the name of the specialist for you to see. However, you probably have a choice of specialists within the HMO. For help in choosing a specialist, see How To Choose A Specialist.

You or your PCP will call for the appointment. If your doctor's office calls, you are likely to get an appointment sooner than if you call yourself.

When you see the specialist, there will be a co-pay to pay, just like there was when you visited your PCP. Follow-up visits with a specialist are only covered if they were part of the referral, or if a new referral has been approved, or if no prior approval is required by your insurer.

Any additional treatment you may require must be approved by the HMO.

If you receive a prescription for a medicine, it must be taken to a pharmacy that contracts with the HMO. Such pharmacies are also listed in the Directory of Participating Providers. You pay a co-pay when you pick-up your prescriptions. The amount of the co-pay likely differs depending on the type of drug which was prescribed (for instance, brand name vs. generic.)

Variations on the HMO model are developing as HMOs respond to members' needs and as HMOs obtain experience with the model. Some current variations are:

  • To permit women to have an OB/GYN as their PCP.
  • To allow the PCP to make a specialist referral without approval of the HMO or a referral committee.
  • To allow a PCP to refer to specialists for multiple visits, or an unlimited number of visits.
  • To allow self-referrals to specialists by members rather than insisting on referrals by PCPs.

Keep in mind that HMO benefits usually include regular checkups for you and your covered family members. Many HMOs allow women to visit a network gynecologist annually without the primary doctor's referral. Maternity care is usually fully covered.

What Is An HMO?

Traditionally, an HMO was an organization that provided medical care in their own hospital and other facilities with their own medical staff. The HMO set health standards for their doctors to follow. Preventive medicine was encouraged. Doctors were paid a set fee no matter how many times they saw a patient, or for what purpose.

There are very few HMOs today that have their own doctors and facilities. However, HMOs continue the idea of managing care by creating a "virtual HMO" :

  • Insurers contract with independent doctors and health care facilities. 
  • Most HMOs pay doctors per patient instead of per the number of times the doctor sees you or does for you. 
  • Facilities like hospitals are generally paid according to a schedule for each treatment rather than for the care actually delivered.

The managed care concept is very different from the old "indemnity" model where you, the patient, have control of what health care you want, from which doctor, and in which hospital.  Under the indemnity model of health insurance, you have control over your care. Basically, the only question with indemnity insurance is how much the insurance company will reimburse you. 

Benefits Provided By An HMO

Each HMO offers several different types of plans to employers and individuals. While they all are built on the model of managed care instead of the traditional fee-for-service insurance model, benefits vary according to the plan. Benefits include:

Hospital charges: Hospital charges are usually covered 100%, although the plan may require that a member pay a deductible. Some plans may only cover 70% or 80% of charges up to a certain amount after which they'll cover 100%. For example if the amount (known as a "stop-loss") is $5,000, the member would pay 70% of the cost of hospitalization until the member has paid $5,000. All amounts over $5,000 will be paid in full by the HMO.

Doctor's visits: Doctor's visits are generally covered 100% except that members are required to pay a small amount for each doctor visit known as a co-pay. Co-pays can be as low as $5 or $10, or can be as much as $25. The co-pay covers everything that a member receives a visit including any shots, x-rays or lab tests.

Prescription Drugs: Prescription drugs on the HMO's formulary are usually covered in the same manner as a doctor's visit: the member pays a small co-pay and the HMO pays the rest. Often, there are two levels of co-pays, a low one for generic drugs, a higher one for brand name. Some plans add a third, mid-range co-pay for those cases where a brand name drug has no generic equivalent.

Emergency Room: HMOs cover emergency room care.

  • For plans issued before September 23, 2010: This is the one area in which most HMOs permit use of non-HMO facilities because emergencies can happen anywhere at any time.
  • For plans issued on or after September 23, 2010: New health plans cannot require you to get prior approval before seeking emergency room services from a provider or hospital outside your plan's network. Plans can not require higher co-payments or co-insurance for out-of-network emergency room services.

HMO's used to insist on prior approval to use an emergency room unless the reason for the visit is life threatening or if failure to obtain immediate treatment would have resulted in a much more serious medical condition. Many are relaxing that obligation, but continue a requirement that a prudent person would have sought emergency room care in the situation.

Many plans impose a co-pay of $50 - $100 for each emergency room visit which does not result in a hospital confinement.

Stop Loss: Some HMOs also offer a stop-loss provision which means that after out-of-pocket co-pay expenses reach an amount in a calendar such as $1,000 or $2,500, there are no more co-pays for the remainder of the year.

Home Health Care and Nursing Homes: All HMO plans cover some degree of home health care and care in nursing homes. Most treatments have limits on them. Home health, for example, or nursing home care will be limited to a specific number of days of care the HMO will provide in a calendar year.

Mental Health: Mental health care under an HMO is generally designed to provide crisis care only for a specific problem, not long term psychotherapy.

Plans usually provide only a limited number of mental health visits per calendar year and require a higher co-payment per visit than for other physician visits.

Maximum Lifetime Benefit: HMOs generally do not have an overall maximum benefit -- a limitation which is normally found in Indemnity and PPO plans. (To learn more, see Types of Plans.)

Preventive Treatment: Preventive treatment is frequently covered under an HMO -- but generally not other types of insurance plans.

Preventive treatment includes:

  • Regular check-ups
  • Regular pap smears and mammography exams for women
  • Prostate tests for men
  • Immunizations
  • Vaccinations

Preventive treatments are often covered under a schedule under which the time interval between preventive treatments varies by the test and the age of the member. For example, prostate screening may be provided only once every five years for men under age 50 but every two years for members over age 50.

Many HMOs offer classes on healthy lifestyles, such as how to stop smoking, low fat cooking, and stress management. They also provide literature and periodic magazines or newsletters to members about healthy living.

Some HMOs provide refunds or rebates for members who regularly use a gym facility that includes cardio-vascular equipment and classes.


  • For health plans issued on or after September 23, 2010: Because of The Affordable Care Act (Obamacare), you have the right to both an internal appeal and an external appeal to an independent reviewer.
  • For a glossary of health insurance terms to know, click here

The History Of HMOs

When HMOs were first started in the middle of the last century in California, they were called Pre-Paid Health Plans. HMOs were used as a way to help attract miners to the fields by providing "cradle-to-grave" health care for a set fee by the company's doctors in the company's health facilities.

The current popularity of HMOs in the United States traces back to the 1970s and 1980s when costs of medical care spiraled out of control under the traditional "indemnity" model of health insurance then in effect.

In response, the insurance companies turned to Managed Care.

The first extensive use of Managed Care in the U.S. was in the form of adding PreCertification to indemnity health insurance policies. Doctors and hospitals were required to "pre-certify" non-emergency hospital admissions and certain, expensive out-patient procedures before they were performed. The insurance company then determined if the proposed care was appropriate and necessary. If so, the company authorized the treatment. If not, the company was able to state before the care was given that it would not be paid for by the insurance company.

PreCertification was used mainly to reduce unnecessary or unnecessarily long hospital confinements.

The next logical step was the move to HMOs.

The move to HMOs was helped by the federal government. The Health Management Organization Act of 1973 ("HMO Act") required that an employer offering health insurance must include an HMO type policy as part of its insurance program.

The Pluses And Minuses Of An HMO Type Health Insurance Plan


Patient Out-of-Pocket Costs - This is the lowest of all plans in premiums. The insured usually pays no more than a co-pay per office visit such as $2.00, $5.00 or $10.00 which covers the entire visit including x-rays and lab tests. There are similar payments to the pharmacist for prescriptions. Most other services, hospitalization, radiotherapy, etc. are provided without cost to the patient.

Benefits -- HMOs provide more preventive and educational procedures and programs than other types of insurance. Also, HMOs claim their doctors practice better medicine because they are supervised by the medical groups and the HMOs they belong to. It's arguable whether they focus on quality of medical care or the lowest possible expense. 
Paperwork -- There is virtually no paperwork in the HMO system that the patient must complete. Any paperwork that must be done is completed by the HMO staff.

Easier Access -- While there may be delays with getting an appointment with your Primary Care Physician, most HMOs have their own or access to Urgent Care or Walk-In facilities to provide care quickly when needed.


Physician And Health Facility Choice --All treatment must be performed by a contracting provider in a contracting hospital except in life-threatening emergencies. Members lose freedom to choose healthcare providers and services.

Limited Choice of Treatment - All treatment must go through a Primary Care Physician (PCP) with that physician deciding when and if the patient should see a specialist and, if so, which one. Also, the patient cannot change PCPs without prior approval. Any charges incurred outside this closed network system are solely the responsibility of the patient.

Delays in Care -- Most procedures beyond the office visit to the PCP and some routine tests require preauthorization which can delay x-rays, specialist care, and more expensive treatments and procedures. While HMOs have made efforts to prevent unnecessary delays, any delay that occurs before a necessary test or treatment can be given creates unnecessary stress and aggravation. 

Who Regulates HMOs?

HMOs are generally regulated by state health departments under the authority of state public health laws. In some states, HMOs are regulated jointly by the State Insurance Department.

The laws define what benefits are required as well as required appeals.

Where there is joint regulation, the Health Department regulates health care services and treatment provided by an HMO. The Insurance Department regulates the HMO's filing-plan design, accounting and financial reserve requirements. For example, in New York anti-fraud provision in the insurance laws apply to HMOs.

To contact the health department in your state, see: offsite link

To contact the insurance department, see: offsite link

What Protections Does ERISA Provide To HMO Members?

Under ERISA:

  • There must be disclosure through a Summary Plan Description of a plan's benefits, limitations and member obligations; identification of the plan administrator and those with authority to decide claims, and directions for obtaining further information and plan documents.
  • Each member must be given a copy of the Summary Plan Description Plan and has a right to see the entire Plan, including the internal criteria that determine rights to benefits.
  • The plan must be operated for the sole benefit of plan beneficiaries. (The people who run the plan have a fiduciary duty to act like prudent people who run the plan for the sole benefit of plan beneficiaries).
  • Employers have no duty to maintain any particular kinds of levels of employee benefits, or to keep a plan in effect at all. If an employer terminates benefits, it must do so in a non-discriminatory manner.
  • Members cannot be discriminated against with respect to benefits.
  • There must be a procedure for full and fair internal review of denied claims. Plans cannot require more than two levels of internal review.

Members have a right to action to sue to enforce their rights, and recover penalties and/or attorneys' fees in certain situations. (Note: to discourage frivolous lawsuits, employers also have a right to receive attorney fees).