HMOs defined

HMOs, or health maintenance organizations, are types of managed care providers that can operate in both the public and private sectors. HMOs are expected to provide health services to its members while adhering to state regulations and operating procedures.

They have been in practice since the 1970’s, and in general, managed care plans have evolved to become apopular choice for companies seeking a healthcare plan for their employees.

The ultimate purpose of an HMO is to provide preventative health services to people at a low cost which can be beneficial to those who need a health plan but could not otherwise afford one.

How are HMOs different from other types of health plans?

Here are a few ways that HMOs differ from other health plans.

• • They prioritize preventative care at a low cost.Whereas traditional healthcare insurance plans cover costs for sickness or injury as it happens, HMOs are structured around the concept of preventative care. This plan offers its members access to cancer screenings, physicals and vaccinations, either covering their member’s fees, or helping them pay a fraction of the fee. This can encourage members to actively partake in appointments and health consultations on a routine basis, and in doing so, prevent costly injury or illness in the future.

• They don’t always allow members to select their own physicians.Another aspect to this care plan that differentiates it from other insurance providers is the inability for a member to seek outside care from a physician that is not contracted to their health insurance provider. This means that if an employee needs to see a provider outside of their network, they will need to pay the full out-of-pocket cost.

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Best practices to use in HMOs

There are four organizational models to choose from when an employee becomes a member of an HMO. Each of these models represents different plans that a member can have in order to best accommodate their healthcare needs.

1. Individual practice associations (IPA)
2. The group plan
3. The network plan
4. Staff arrangement

1. Individual practice associations (IPA)

This plan operates under a pay-as-needed basis, meaning each time a member needs to go to their primary physician for illness, injury or a general checkup, the sponsor pays the amount for that specific visit to the health care provider and nothing more.

2. The group plan

This option allows an HMO to pay a per capita fee to a group of physicians, with the head physician determining the distribution of pay among them.

3. The network plan

This option is good for members with more complex needs. In this plan, an HMO opens a contract with multiple groups of physicians, some catering to specialized areas and others assuming general practitioner operations. This approach allows members more options when choosing their provider.

4. Staff arrangement

This plan includes an HMO owning a physician facility and therefore being the employer of a physician or group of physicians. This option can be a great way to reduce per-capita costs, but this means that the member might have to pay a hefty starting fee in order to benefit from their services.

Related:How to Reduce Employee Turnover

Here are the answers to two potential questions you might still have regarding HMOs and whether or not an HMO plan would be a good fit for your company.