Question

Describe the main characteristics of a health maintenance organization. Give examples of the 4 HMO models.

Answer 1

Health maintenance organizations (HMOs) are a type of health insurance plan that provides health insurance coverage for a fixed monthly or annual fee, an HMO provides medical care through a network of doctors and other health care providers who have agreed by contract to treat patients in accordance with the HMO's guidelines and restrictions in exchange for a steady stream of customers. These contracts offer lower premiums than traditional insurance since the health providers have the advantage of having patients directed to them but they also add additional restrictions to the HMO's members. HMOs cover emergency care regardless of the health care provider's contracted status.

Following are the main characteristics of HMOs:

1. Model type: HMOs are categorised into 4 specific model types namely; Staff Model, Group Model, Open Panel Model, and Network Model.

2. Profit status: HMOs could be of either type, for-profit or non-profit. However, recently emergence is observed in the for-profit HMOs.

3. Federal Qualification Status: Federal qualification status is a regulatory process. It is a voluntary process and to be federally qualified HMO, several requirements must be met by HMO. Mostly, HMOs in operation are federally qualified.

4. Publicly sponsored programme participation: Many HMOs participate in publicly sponsored programmes such as Medicare and Medicaid to expand its membership.

5. Chain affiliation: Many individual HMOs have chain affiliations with larger regional or national managed care organizations.

6. Age: The HMO industry is relatively younger compared to it's indemnity-based counterpart.

7. Size: Generally, the size of HMO is measured by its enrollees (membership).

8. Geographical location: Geographical location influences the performances of HMOs in terms of the rate of penetration.

Four HMO models are:

1. Staff Model: In this type of model, the doctors and health care professionals are the employees of the HMO and have their offices in the buildings owned by HMO. The physicians only see HMO member patients.

2. Group Models: In this type of model, instead of directly hiring medical professionals, HMO ties up with the medical staff belonging to multi-speciality physician group practices or private facilities whose members are not allowed to treat non-HMO patients. The HMO pays the group in bulk and lets the physicians in the group decide how the money is distributed.

3. Open Panel Model: In this type, the HMO contracts an independent practice association and works similarly as a group model except it's members are allowed to treat non-HMO patients.

4. Network Model: This type of model is like a combination of a group model and an open-panel model. HMO contracts some combination of multi speciality physician group practices, independent practice associations and fully independent physicians to provide medical services. This type of model is more popular with the recently established HMOs.