What is an HMO?
Health Maintenance Organization (HMO) is a special type of health care plan offered in the United States. It costs less compared to traditional health insurance but the trade-off is a limited range of treatments.
The earliest form of HMO is most likely the one which was offered in Tacoma, Washington by Western Clinic in the year 1910. This is the earliest known prepaid medical service which cost lumber mill employees and owners only $.050 of premium every month.
After almost two decades, Ross-Loos Medical Group established the first formal HMO Company in the United States. It had its headquarters located at Los Angeles and provided prepaid medical services for both the Los Angeles County and Los Angeles Department of Water and Power (DWP) employees. The cost of the premium was only $1.50 each month which was gladly purchased by more or less 500 employees of DWP. In just a year, the Los Angeles Fire Department also signed-up followed by the Los Angeles Police Department, the Southern California Telephone Company and the rest as others will say is history. By 1951, the company had over 35,000 of HMO clients which include city and county employees as well as teachers.
More and more companies which offer HMO services emerged and soon, citizens had a variety of HMO companies to choose from like CIGNA and Blue Cross. Unfortunately, when the Great Depression hit the United States, the number of HMO greatly decreased in number but his eventually gave birth to the Health Maintenance Organization Act of 1973 which was spearheaded by the father of HMO, Paul Ellwood. Soon, HMO companies started to expand and develop into the HMO program which most of us are enjoying.
There are different types of HMO which you can choose from. Below is a brief description of these types.
This HMO type has employed physicians who hold their offices inside HMO buildings. Theses physician are therefore the direct employees of the HMO Company which gives the company full exclusivity of their services.
Unlike staff model, this HMO type only contracts a variety of specialty physicians who are tasked to give services to HMO members. A perfect example of this model is Kaiser Permanente.
Open Panel Model
This type of HMO allows physicians to hold their own offices and treat even non-HMO members. The services of these physicians are only tapped when the group medical practice deems it necessary.
This HMO type is the most common. HMO companies normally signs contracts with Independent Practice Associations as well as individual physicians who are amenable to provide services to their HMO members in exchange with a particular rate. This is cheaper for the HMO company and more beneficial for the physicians since their scope of business will not be limited to the HMO company alone.
The Operational Procedure of HMO
If you wish to avail of an HMO plan, you will be requested to choose a primary care physician (PCP) who will act as your primary doctor. He or she determines all the medical services that you will need and gives you referral letters to specialists who are affiliated with the HMO company. There are special conditions offered by different HMO companies so it is best that you read through these before signing up with them. It is also highly recommended that you skim through their list of health care physicians to check if your medical needs will be duly accommodated.