Health Insurance: HMOs (Managed Care Policies)

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.

• If you have insurance through work, you can continue your insurance through COBRA and HIPAA. Before automatically continuing work related insurance, check the individual health insurance market in the state in which you live to see which insurance is better for you. Pre-existing health conditions no longer matter. For information, see: www.healthcare.gov
• If you are having difficulty paying premiums or other health related costs, see Health Insurance: Financial Assistance To Pay Premiums, Deductibles, Copays, Coinsurance and How To Deal With A Financial Crunch.  

To learn more, see:

• What Is An HMO?  
  • What Is The History Of HMOs? 
  • Wording
    • Words you are likely to find in an HMO contract  
    • Words Common To All Types Of Health Insurance Policies.
• As A Practical Matter, From A Member's Point Of View, How Does An HMO Work?   
• Benefits Provided By An HMO  
• The Pluses And Minuses Of An HMO Type Health Insurance Plan
• How To Maximize Use Of An HMO And Other Managed Care Policies
• Finances
  • Financial Assistance To Help Pay Premiums, Co-Pays, Deductibles, Co-Insurance
  • How To Deal With A Financial Crunch Or Crisis
• Claims
  • When You Are Covered By A Managed Care Plan (HMO)
  • When You Pay Part Of The Bill
  • When You Have More Than One Health Insurance Coverage
• Appeals
  • HMOs: Appeals
  • Appealing Denial Of A Referral Or Pre-certification For Treatment
  • Appealing Denial Of A Referral To A Specialist Or Facility Outside the Network
  • Who Regulates HMOs?  
  • What Protections Does ERISA Provide To HMO Members?  

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

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