Health Maintenance Organizations Discussion Paper

Health Maintenance Organizations, or HMOs, were originally designed to cut healthcare costs while emphasizing prevention and quality of care for patients. HMOs provide comprehensive health care services, including hospitalization, office visits, preventive health checkups and immunizations (here you need to add the last name of your textbooks author, and date of publication). This paper will discuss the basics of HMOs, the types of services they offer, the demographics of the people that they serve, and their relevance to me personally.

When an individual joins an HMO, he or she is considered a “member” of that plan, and can expect to receive a comprehensive array of healthcare services. Initially, the patient must select a primary care physician, who will serve as the coordinator of all the other healthcare services needed by the patient; the role of the PCP includes making necessary referrals to specialists that may be needed in order to diagnose or treat conditions that go beyond the skills of the primary care doctor (Carson, 2009.) The HMO is comprised of doctors who are either employees of the organization or are independent practitioners who have signed contracts with the HMO to provide services to its members. Health Maintenance Organizations  If members of the plan seek healthcare from the providers within the HMO network, there is usually little or no cost for them to pay out-of-pocket; however, if they decide to see a healthcare provider who is not in the network, little or none of the costs will be covered by the plan. That is obviously a major incentive for patients to stay within the plan’s network.

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The methods by which HMOs are financed are called “capitation” plans, in which medical care is provided to patients for a fixed amount that is paid to the plan. Usually, the employer who contracts with the HMO to provide care for his or her employees pays this fee; if a patient is enrolled in a Medicare HMO, then Medicare is responsible to pay the fees. Some HMOs charge a minimal copayment– typically $5-$10– for all doctors’ visits (Ibid.). The profits of an HMO are based almost entirely on the company’s ability to operate efficiently, as well as providing coverage for people who remain healthy and therefore do not incur many medical costs. Whenever an HMO has a large number of members who have medical conditions that are expensive, its profits will be reduced because the fixed fee is the same, regardless of how many or how few medical appointments and specialists a patient needs.

Within the category of HMOs, however, there are three types of plans. The group practice model pays a salary to the doctors that participate, no matter how many patients they see or treatments they prescribe; the philosophy behind this model is that there is no incentive to provide unnecessary services, so that the HMO can spend less as well as keeping the premiums for patients lower (Health Maintenance Organizations, 2010.) Health Maintenance Organizations  This type of HMO utilizes primary care physicians or nurse practitioners to be the first point of contact in which the patient describes his or her medical complaints, and the professional makes a decision about whether the person needs to see a specialist or to be hospitalized.

Another form of HMO is the individual practice association plans, in which the physicians earn a fee based on the services provided or receives a monthly fee per member, whether or not the patient is actually seen. Because the premium is prepaid, bills and insurance forms are eliminated, reducing the company’s administrative costs; however, because the healthcare typically is not centralized, the patient and physician must locate medical services that are needed. Nevertheless, the costs are still minimal to the patient because the amount paid is independent of the level of services utilized (Ibid.) The third form of HMO is called an “open-ended” plan, which is essentially a combination: it provides conventional fee-for-service coverage for members, so that they receive the benefits of prepaid care but also have the ability to seek services outside the network and pay some of the cost as out-of-pocket copayments.

The demographics of those who utilize HMOs are virtually impossible to establish, because they are available to any and all people who have some form of insurance coverage, whether they are working or not. Medicare, for people who are retired, as well is Medicaid, for people who have little or no income, offer HMOs as well as most employers because of the cost-saving benefits to the employer in the form of fewer days lost due to illness, as well as the employees, who can save money by paying little or no copayments for their care. Therefore, the populations of people who utilize HMOs are comprised of the young, old, mixed ethnicities and races, as well as various socioeconomic groups. Most likely, however, very affluent people who can afford to pay for their healthcare out-of-pocket would not be inclined to sign up for an HMO, because certain procedures that they desire might not be covered, or the doctors that they would rather see are not in the networks. People who would like to be more in charge of their own health care decisions are less likely to choose an HMO.

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I chose to write about HMOs because while their goal is to save money and reduce healthcare costs, I believe that there is a trade-off in enrolling in an HMO: they cost less for the individual, but a significant disadvantage is not being able to continue to see one’s own doctor if that physician is not in the network. For people who are young and healthy, an HMO is probably a reasonable option because young people tend not to go to the doctor frequently if at all, unless and until they become sick. For middle-aged and older people, however, as well as people with chronic diseases, enrolling in an HMO can be significantly limiting since HMOs are less likely to cover experimental or nontraditional procedures and medications. For example, certain cancer drugs have been tried to treat other illnesses, but because they are very expensive, HMOs may refuse to cover them, saying that they are being used for purposes other than those for which they were approved. In addition, many doctors have stopped participating in HMOs because of the pressure to see many patients without spending much time with any of them, as well is the low rates of reimbursement paid to the doctors. This presents a serious obstacle to patients who may be in the position of having to spend precious time while ill searching for a new doctor, because the physician with whom they have worked for a long time is no a longer participating provider. The original reasons for HMOs being established were good ones: cost savings and accountability to prevent wasteful spending. However, I believe that they have outlived their usefulness and frequently seriously compromise the health of their members by denying crucial treatments, unless the person is able to raise awareness from the media by bringing some of the most horrifying denials of treatment into public view.

References

Carson, G. (2009, May 5). Health Maintenance Organizations. Retrieved March 13, 2012, from www.missourifamilies.org: http://missourifamilies.org/features/healtharticles/health43.htm

Health Maintenance Organizations Discussion Paper