Health Maintenance Organization

A Managed Care Option

The Health Maintenance Organization (HMO) is another example of a managed health care plan. In this case, the HMO contracts with your insurance carrier and assumes the responsibility of managing your care. In return, your insurance carrier pays a portion of your monthly premium to your health maintenance organization as an advanced payment for any services you may require for that month.

There are two types of HMO's to choose from, the staff/group plan or an Independent Practice Association (IPA).

Physicians who are members of the group practice or staff plan receive a set monthly salary regardless of the number of patients they see. The group is centrally located in a clinic- type setting. The primary care physician (PCP) assigned to your care coordinates all of your healthcare services. Your PCP is responsible for determining if you should be seen by a specialist or if you are in need of hospitalization. In this way, he/she acts as the gatekeeper.

It is thought that by providing physicians with a monthly salary regardless of the number of treatments they provide, unnecessary care and referrals are eliminated.

The independent provider association (IPA) joins physicians in private practices together. The group contracts with insurance providers to see health maintenance organization members. In this case, the physicians are paid based upon either a monthly fee or on the services they provide. Independent provider members can maintain their private practices while also seeing HMO members.

There are advantages and disadvantages to the IPA model. Independent Provider Associations are not centrally located. Having to drive from your PCP to a specialist could be viewed as a disadvantage. On the plus side, your current private practice physician may be a member of an IPA which is contracted with your insurance carrier. Not having to change doctors could be a huge advantage if you are considering switching from a PPO to an HMO.

Here’s an example:

You currently belong to a PPO but are considering changing to an HMO in order to save money. You learn there are two HMO’s in your community, the Friendly Physician’s HMO group and the Devoted Doctors Network. You drive by the offices for the Friendly Physician’s HMO group on your way to work but you haven’t seen a building for the Devoted Doctors group.

You find out from your current PPO physician that he/she is a member of the Devoted Doctors IPA group. He/she informs you that the HMO group he/she belongs to does not have one building where all of the networking physicians are located. The physicians in the Devoted Doctors group have private office located throughout the community.

The choice is up to you. Would you prefer all of your physicians centrally located in one building, or keep your current physician and potentially have to drive to another office building for any specialist referrals?

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