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Health Insurance: HMOs (Managed Care Policies)

What Is An HMO?

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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. 

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