Sabiha Khan of Tampa, FL - What’s an HMO or Health Maintenance Organization?

Sabiha Haider khan is currently the Director of Compliance at Quality Health Plans of New York (QHP). She also contributes her time toserving the less fortunate through the BHK Humanitarian Foundation as well as local charities in and around Tampa, FL. Sabiha Khan provides a breakdown of a basic summary of how a HMO functions and how it differs from a PPO plan.

Individuals who need to secure their health insurance policies may find that there are a number of different health insurance companies with certain unique features. A highly preferred insurance provider in the insurance marketplace happens to be HMO or health maintenance organization, which has a vast network of qualified physicians that you can access via its insurance coverage.

An HMO happens to be an organization or network, which provides insurance for an annual or monthly fee. HMOs are made of medical insurance firms who restrict insurance coverage to only aid provided by doctors who have a contract with the HMO to this extent. These contracts enable lower premiums as all cases are referred only to doctors recommended by health providers. However additional restrictions may also be placed by these contracts on members of the HMO.

If you’re not sure whether to go for a plan from an HMO or not, you must consider the price of premiums and all out-of-pocket expenses, in case your medical problem demands specialized care. You must also consider whether having a separate primary health care provider is necessary for you.

How Do HMOs Work?

HMOs are organized private or public entities, which provide supplemental and basic health services and aid to all its subscribers. This organization secures a network of healthcare of providers by signing contracts with healthcare physicians, specialists, and clinical facilities. Every entity that enters into a contract with an HMO gets paid a fixed fee in exchange for offering their services to subscribers of the HMO. Since this payment is fixed regardless of other conditions, HMOs are capable of offering lower premiums compared to other healthcare insurance providers without compromising on the quality.

HMO subscribers need to pay an annual or monthly premium for accessing healthcare services from an organization’s list of medical providers. However, they are also restricted to obtaining services from these medical providers alone. Insured subscribers must get their services and care from doctors enrolled in the HMO’s network. However, a few kinds of out-of-network healthcare services may be covered by the HMO. Such services include dialysis and emergency care.

Additionally, HMO coverage policies may require that insured subscribers work or live only where the plan has a strong network if they’re looking to qualify for insurance coverage. In case subscribers receive urgent medical care when they aren’t in the HMO’s network region, it may cover all expenses. However, all out-of-network non-emergency medical care received must be paid from the subscriber’s own funds.  

HMO vs PPO (Preferred Provider Organization) Plans

HMO healthcare plans mandate that participants obtain healthcare services only from assigned providers. A PPO happens to be a similar medical care system where services are rendered by medical facilities and professionals to subscribed clients at lower rates. PPO healthcare and medical providers are known as preferred providers.

All PPO participants have the freedom of utilizing services from providers in their network. Medical out-of-network care happens to be available as well. However, the insured will then have to pay higher costs for obtaining services. Unlike PPOs, HMO plans mandate that their participants receive their healthcare services only from assigned providers.

HMO vs POS (Point-Of-Service) Plans

A POS medical plan is similar to an HMO as they both require policyholders to select in-network healthcare doctors and to obtain referrals from such doctors only if they’re looking for specialist services. POS plans are similar to PPO plans in that although they provide coverage for all out-of-network medical services, policyholders have to shell out more compared to what they would have paid for in-network medical services.

However, POS plans pay more for out-of-network medical services in case they are referred by primary healthcare physicians compared to if they were availed by policyholders without any referral. POS plan premiums fall between the premiums charged by an HMO and a PPO.

These plans also need policyholders to shell out co-payments. However, when it comes to in-network services, co-payments range only between $10 - $25 an appointment. These plans don’t have deductibles either for availing in-network medical services, which happens to be a major advantage over PPO plans.

POS plans provide nationwide coverage as well that is beneficial for patients who need to travel on a frequent basis. A major disadvantage is that all out-of-network deductibles are usually high when it comes to POS plans. Patients who utilize out-of-network medical services wind up footing the entire bill until the deductible amount is reached. Additionally, patients who never utilize the out-of-network medical services of POS plans are better off signing up for HMO plans as they have lower premiums.