Health Maintenance Organization (HMO Plans) is only one of many types of managed care arrangements. In this, more emphasis is placed on prevention and quality of care. In the HMO Plan in health insurance, there is an opportunity to control healthcare costs of managed care.
When someone joins an HMO Plan in health insurance, they select a primary care physician from the list provided by the HMO. PCP also called the gatekeeper in medical billing. Primary care physician coordinates with all plan members for medical care. If there is a requirement of a specialist for treatment, the primary care physician (PCP) will refer the patient to a specialist who is usually also in a member of the HMO network.
Patients if go outside of the HMO network to receive treatment or service (Unless given prior approval) will probably pay all or most of the cost of that care out of their own pockets.
HMO network use a “capitated” financing system. In this system health service is provided to each member of the plan for a prior fixed amount. Example like an employer contracts with an HMO to provide healthcare services for its employees and pay this fixed amount charge.
Identifying an HMO member by their ID cards can most easily be accomplished by locating the name of the primary care provider (PCP) on the card, as well as the co-pay information.
Following are some of the Medicaid HMOs
- Americaid Medicaid
- Amerihealth
- Care Plus Health Plans
- Fidelis Care
Following are some of the Medicare HMOs
- Evercare
- US healthcare (If id start with ME)
- United healthcare
- Oxford Medicare
- HIP Medicare
- CIGNA Medicare
HMO Coverage in Health Insurance
If patient has two insurances and one of the insurance is a HMO of the other insurance then we will bill the HMO only. Eg. If patient has Medicare insurance and Evercare then we will Evercare only not Medicare.
If a patient has two insurances and one of the insurance is a HMO, but not a HMO of the other insurance then we will follow the sequence given on the registration form. Eg. A patient has Oxford Medicare insurance and Fidelis Care then we will take Oxford Medicare as primary and Fidelis Care as secondary.
Third Party Reimbursement Methods
Third party reimbursement schemes seen in health care practices to day, greatly add to the complexity of the practices’ administrative billing operations. Many practices must work concurrently with three of the following 4 reimbursement methods.
- Capitation
- Fee for Service
- Fee for service with utilization
- Episode of care
1- Capitation
Capitation is the method used by HMOs and some managed care plans to pay the health care provider a fixed amount on a per capita (per person) basis. This fee is independent of the number of services rendered to enrolled patient. Capitation is usually described in the HMO/managed care literature as the PMPM (per member per month) payment. This reimbursement method was initially provided only to primary care physicians.
If patient is part of Medicare HMO, then Medicare pays the fee. Some HMOs charge patients a small amount of $5 to $10 co-payment for each visit. If the HMO members are healthy and fall sick less, it will make a profit. Under a “capitation system“, the HMO is paid a fixed perticular amount per person in place of, for each visit or by type of service.
2- Fee- For – Service
This is the general or traditional form of reimbursement. Each individual services performed is itemized, priced, and changed to the patient’s account. Payment for services may be made by the patient or form a third-party payer.
3- Fee-For-Service With Utilization
It is traditional fee-for-service method with the addition of prospective and retrospective review of health care providers’ treatment. Utilization review is designed to ensure the patient is given all necessary care in the most appropriate health care setting by the most cost effective method. This reimbursement scheme is most often chosen by employers who elect to cut the cost of healthcare through managed care.
4- Episode of Care Reimbursement
It is a payment method in which the healthcare provider receives one lump sum amount for all services rendered to the patient for a specific illness. Example- reimbursement for the global surgical fee paid to physicians who perform major surgery. These global surgical fee payments cover the following services
- A pre-operative visit
- The Surgery
- Normal post-operative care
Advantages and Disadvantages of HMOs
The main advantage of having an HMO as health insurance is, the plan does not need claim forms when a visit to a doctor or in hospital admission.
HMO plan member only has to show an insurance card that is proof of insurance at the provider’s office or hospital.
An HMO plan charges a fixed fee every month so its members can receive health care. There will be a co-payment amount for each doctor visit, however, with the HMO, fees can be forecasted, unlike a fee-for-service insurance plan.
In HMO plan out-of-pocket expenses are very low.
In an HMO Plan, there are some disadvantages. The premium that is paid by the policyholder is only enough to cover the costs of doctors in the network. The members are “fixed” to a PCP and if managed care plans change, then the member may not be able to continue with the same PCP.
The major disadvantage of the HMO plan in health insurance or medical billing is that it is difficult to get any specialized care because the get a referral first is a must in each case.
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