Understanding HMOs
Health Maintenance Organizations (HMOs) offer health care in certain
geographic areas. Members of the plan agree on a set number of comprehensive
services for an affordable monthly premium. Generally, these plans
have no deductibles and minimal copay. HMO participants must use
the plan facilities and health care providers in order to be covered
by the HMO. However, out-of-network emergency care is usually covered.
There are several types of HMOs. In the Staff Model, doctors and
other providers are usually directly employed by the HMO. Members
must visit these providers at designated facilities, medical centers
or offices. The Independent Practice Association (IPA) Model allows
contracts with physicians in private practice or with associations
of independent physicians. In the IPA model, plan members may use
the offices of medical groups or private physicians as long as they
are part of the HMO plan.
Think of it this way: An HMO is an organization that may be housed
under one roof or many local offices. All participating providers
are bound by the HMO guidelines, and all plan members must stay within
the listed providers if they want their non-emergency health care
to be covered by the plan. In addition, HMO members must choose a
primary care physician. This plan doctor is in charge of all health
care decisions and recommendations for the patient.
PPOs: Less cost than Fee-for-Service but more than HMOs
A Preferred Provider Organization (or PPO) usually contains groups
of hospitals and providers that contract with employers, insurers,
third-party administrators and others to provide health care services
to covered persons and to accept negotiated fees as payment for those
services. In plain English: A PPO usually has a broader base than
an HMO, and feels more like old-fashioned Fee-for-Service plans to
participating plan members. The cost is typically much lower than
Fee-for-Service, however, because plan providers accept discounted
fees. Unlike HMOs, PPOs allow plan participants to go outside the
network and still receive coverage, although the benefits will be
more limited out-of-network.
Point-of-Service (POS)
A POS is an HMO with indemnity-like out-of-network benefits. The
patient chooses to seek treatment in-network or out-of-network at
the time they need the service. POS plans generally cost more in
monthly premiums than straight HMOs, but they allow the flexibility
to go directly to a doctor other than the primary care physician
and to consult specialists without referrals.
Fee-for-Service: Traditional insurance, just like Mom and Dad used
to have
Fee-for-Service is the conventional form of health insurance that
enables employees to choose their own physicians, specialists and
hospitals. Most plans require that members meet a set deductible
as well as a coinsurance payment. Insurers pay a percentage (usually
80%) of covered "reasonable and customary" service charges.
(These rates are based on comparisons of other local providers in
the same area.) Employees pay the remaining percentage for covered
care, as well as charges over the "reasonable and customary" level.
Different plans vary, with all Fee-for-Service plans give employees
complete freedom to select any medical care provider.
Teaching an old dog new tricks? Maybe not ...
For many years, Fee-for-Service coverage commanded star billing
in employee benefits packages. One reason was that in the past, Fee-for-Service
coverage usually did not include any cost containment provisions.
The major advantages? Freedom for the consumer to choose providers
and few caps on expenditures. Today, however, many Fee-for-Service
plans also offer a variety of cost containment features. These features
can hold down costs for the insurance company and the business owner,
but the consumer may end up feeling restricted when he or she uses
the plan services.
What other types of insurance might benefit you and your employees?
Find
out... >> click here |
