Health Maintenance Organization / HMO

An HMO, Health Maintenance Organization, is a type of managed care health insurance. Unlike the traditional insurance, you have specific doctors to see and health care providers to use. There are also other restrictions to the HMO and each of these help keep the cost of the health coverage low so the insurers can pass the savings onto you in the form of a lower premium.

One of the restrictions of the HMO health insurance is the use of specified doctors, facilities and other health care providers. These service providers have a contract with the HMO to provide their services at a lower cost to the company. If you use a provider not on the list, the HMO doesn’t pay anything for their services. The doctors and hospitals take advantage of the opportunity to be on the HMO because they present an opportunity to have a group of patients whom they know have the capability to pay.

Health Maintenance Organization insurance also requires that each patient have a primary care physician. The primary care physician is somewhat of a gatekeeper. He is normally a family doctor but can also be an internist, general practitioner or pediatrician. He decides whether you should see a specialist or not. If you go to a specialist, and it’s not a medical emergency, then the insurance company doesn’t pay for the services.

Some of the newer, “open access” HMOs don’t include the requirement of a referral from a primary care physician but they may have a higher co-pay if you don’t have a referral to see one. You have to read the plan carefully before you purchase to know whether it is an “open access” HMO.

There are distinct advantages to Health Maintenance Organization insurance plans. The first is the cost of the Health Maintenance Organization compared to traditional indemnity plans. HMO coverage tends to be cheaper than comparative indemnity plans. If you have all the bells and whistles in your plan, of course you can expect to pay more than a plain vanilla indemnity plan.

The second advantage is the co-pay. While indemnity, the traditional health insurance, requires you only to pay co-pays and co-insurance. However, there are some HMOs, called deductible HMOs, that you do have a deductible before the insurance company pays any of the cost. This is in addition to co-pays. These plans are normally far more affordable, however.

There is a third advantage to the Health Maintenance Organization health insurance. Many of the preventative care procedures have a lower co-pay or receive100 percent payment. The focus on preventing disease is another way that HMOs keep the health care costs lower. They reward people for participating in these services.

Some distinct disadvantages also exist in the Health Maintenance Organization policy. If the plan doesn’t list your family physician as one of the providers, you have to change doctors. If you don’t, the plan is useless because you won’t have any coverage when you visit the doctor or need medical care. Always check the list of providers to make certain that yours or one near you is available before you purchase any policy.

A second problem is the inability to seek a second opinion without the primary care physician’s okay. You are restricted from seeking an outside opinion if you believe that you require additional or different services. However, there is a utilization review board to use for an appeal.