HMO's (which is the common abbreviation for Health Maintenance Organizations) are generally the
cheapest type of insurances to buy. Interestingly enough these are generally the most profitable
products for insurance companies to sell (read on and draw your own conclusions).
HMO's give you the LEAST AMOUNT OF CHOICE. You are only covered for visits to doctors and
facilities which have contracted directly with the HMO (know as the HMO's "network"). While
there are some exceptions for emergencies or while you are away from home, you are otherwise
locked into the HMO's provider network. You are required to select a Primary Care Physician
(also know as your PCP). PCP's usually have the option to limit the number of members they
will accept from an HMO, therefore a specific PCP may or may not accept you. If you later
wish to change PCP's you will have to arrange this through your HMO.
The theory behind the HMO concept is to keep the patient well and thereby avoid costly illness.
To accomplish this, HMO's encourage you to go to your PCP more often by way of low co-payments.
Many HMO's will also arrange for discounts toward things like health club memberships and offer
incentives for you to stop smoking or make other lifestyle changes that will reduce your risk to
your HMO.
HMO's keep their costs down in three major ways. THE PRIMARY COST SAVING MEASURE IS TO PAY YOUR
DOCTOR A SET FEE PER MONTH WHETHER HE or SHE, SEES YOU 10 TIMES, 100 TIMES or NOT AT ALL! This
type of compensation is known as capitation. Although HMO's discourage and sometimes penalize
their providers for shunning their patients, it is not unheard of for some practices to give
preferential treatment to patients with a PPO or traditional Indemnity insurance when it comes
to making an appointment.
The second method of cost saving is to require you to obtain a referral in order to see a
specialist. This saves them money in two ways. One is that by requiring you to call your
PCP for a referral you are giving the PCP an opportunity to treat you for your problem without
the specialist. The other way this saves money is simply by making it more inconvenient for you
to see a specialist by forcing you to ask permission by way of a referral. Many HMO's reward
their providers for restricting the number of referrals they issue or penalize them for issuing
too many. Some HMO's have been know to actually prohibit their providers from even
disclosing more expensive treatment options to their patients.
The third big money-saving system is to require pre-authorization for many treatments and
procedures. Your physician must ask for the HMO's permission in order to provide certain
services. Normally the HMO personnel assigned to grant these permissions are not physicians
(although there is usually an appeals process which may involve HMO employee physicians in the
process).
MEDICARE HMO
Medicare HMO's function essentially the same as "regular" HMO's. Seniors can choose an HMO as
an alternative to more costly Indemnity (traditional) Medicare supplements (know as Medigaps)
with the added benefit that prescription drugs are at least partially covered. The trade-off
is that freedom of choice is greatly reduced and that all of the referral and pre-authorization
restrictions described under
HMO apply. AS OF JANUARY
2000 MANY SENIORS HAVE EXPERIENCED SIGNIFICANT INCREASES IN HMO PREMIUMS AND A REDUCTION
IN PRESCRIPTION BENEFITS. Seniors who want to switch back to a Medigap policy often must wait for the
HMO to make the change. Quite often they experience significant Medigap premium increases in the
process due to the fact that they are older and may have developed medical conditions which were not an
issue when they originally qualified for Medicare.
PPO's (Preferred Provider Organizations) are what many people are choosing today, particularly
consumers who are dismayed by their experience with HMO's. It's what the owners and employees
here at DOCTORS BILLING CLERK utilize. They give you the FREEDOM OF CHOICE found in traditional
indemnity insurance with much of the cost savings of HMO's.
PPO's also have a network of providers and facilities with which they have contracted to provide
services, however the PPO networks tend to be much larger than HMO networks. The BIG difference
here is that you do NOT have to pre-select a PCP (Primary Care Physician) and are FREE to see ANY
provider in their network. REFERRALS ARE NEVER REQUIRED. Co-pays and deductibles might
be slightly higher than HMO's, however you have the FREEDOM to go out of network, and see ANY
healthcare provider you choose. When going OUT OF NETWORK most PPO's act like traditional
indemnity plans whereby you are responsible for the cost of routine care, like office visits.
Most other out of network services are covered at 80%, with you bearing the other 20% as a
co-pay.
While some treatments and procedures may require pre-authorization from your PPO, your physician
is MUCH LESS RESTRICTED. Also the process for obtaining pre-authorization is muck less cumbersome
for both you and your physician.
You also have the freedom to see specialists without obtaining someone's permission by way of a
referral. If you stay within the PPO's network your co-pay will be nominal. If you choose to
see an out of network specialist you'll probably be responsible for a 20% co-pay.
This is the insurance most of us had before HMO's and PPO's came along. Today this is the
"Cadillac" of insurances and, as such, it is also the most expensive. However, you can use
it virtually anywhere. Routine care is almost always your responsibility, with other care
normally covered at 80%, with a 20% co-pay from you.
Most providers will accept payment directly from the insurance company. Those that do not will
require you to pay for their service and you will have to collect from your insurance company.
You have complete freedom to see specialists of your own choosing.
Many consumers with Indemnity insurance also choose to carry a supplement or secondary insurance
(sometimes called major medical) to cover the 20% co-pays.
Never forget!