Health care in America is changing rapidly. Twenty-five years ago, most people in the United States had indemnity insurance coverage. A person with indemnity insurance could go to any doctor, hospital, or other provider (which would bill for each service given), and the insurance and the patient would each pay part of the bill. But today, more than half of all Americans who have health insurance are enrolled in some kind of managed care plan — an organized way of both providing services and paying for them.
Different types of managed care plans work differently and include health maintenance organizations (HMOs). A health maintenance organization (HMO) is a type of managed care organization that provides a form of health insurance coverage in the United States that is fulfilled through hospitals, doctors, and other providers with which the HMO has a contract. Under this (Wikipedia 2007). In other words, it is a type of prepaid medical plan wherein the member pays a monthly pemium.
The purpose of this paper is to define an HMO, understand its concepts, and convince the reader that an HMO is a “for-profit” organization that is slowly destroying our healthcare system. Introduction The HMO has its roots sometime in the early part of the 20th century. Mc Guigan (2007), states in his article that many businesses began offering their employees prepaid medical programs, under which their care was looked after so long as it fell within the scope of allowed procedures.
The HMO did well throughout the mid-part of the century as well, until its use began to decline drastically in the late 1960s and early 1970s. In 1973, the U. S. Department of Health and Human Services passed the HMO Act, which helped cement the HMO as a part of the American medical universe. By this time more and more people have been enticed to be a member of its progam. Employers of big companies start to engage their services in providing healthcare to their employees. And why not?
By giving a discount for their “services”, the public thinks that they have saved a lot of money. In addition to using their contracts with providers for services at a lower price, HMOs hope to gain an advantage over traditional insurance plans by managing their patients’ health care and reducing unnecessary services. To achieve this, most HMOs require members to select a primary care physician (PCP), a doctor who acts as a “gatekeeper” to medical services. PCPs are usually internists, pediatricians, family doctors, or general practitioners.
In a typical HMO, most medical needs must first go through the PCP, who in return gives referrals to the specialists or other doctors if necessary. Emergency medical care does not require prior authorization from a PCP, and many plans allow women to select an OB/GYN in addition to a PCP, whom they may see without a referral. In some cases, a chronically ill patient may be allowed to select a specialist in the field of their illness as a PCP (CBS News 2003). However, some HMO’s especially whem members have chronic illnesses, have a special “containment plan” and pay only the least expensive fees.
The member then shoulders the rest of the payment. According to Mc Guigan (2007), HMOs also manage care through utilization review which is usually expressed as a number of visits or services or a dollar amount per member per month (PMPM). Utilization review is intended to identify providers providing an unusually high amount of services, in which case some services may not be medically necessary, or an unusually low amount of services, in which case patients may not be receiving appropriate care and are in danger of worsening a condition..
When HMOs were coming into existence, indemnity plans often did not cover preventive services, such as immunizations, well-baby checkups, mammograms, or physicals. It is this inclusion of services intended to maintain a member’s health that gave the HMO its name. Some services, such as outpatient mental health care, are often provided on a limited basis, and more costly forms of care, diagnosis, or treatment may not be covered. Experimental treatments and elective services that are not medically necessary (such as elective plastic surgery) are almost never covered.
HMOs often shift some financial risk to providers through a system called capitation, where certain providers (usually PCPs) receive a fixed payment per member per month and in return provide certain services for free. Under this arrangement, the provider does not have the incentive to provide unnecessary care, as he will not receive any additional payment for the care. Some plans offer a bonus to providers whose care meets a predetermined level of quality.