 Personal Finance Powerpoint Presentation. Health Maintenance Organization. Get ready to get financially fit by practicing personal finance. Remember that insurance is part of our overall risk management strategy, a long-term strategy where we follow the adage of measure twice cut once. We put in a formal plan, looking something like this. We're going to set the insurance goals, develop a plan to meet those goals, put the plan into action, and then review the results, and continue the cycle on a periodic basis. We're looking now at the health maintenance organizations, that being the HMOs. Most of this information can be found at Investopedia Health Maintenance Organizations HMO, which you can find online. Take a look at the references, resources. Continue your research from there. This is by Adam Hayes, updated March 3, 2022. We've been talking about insurance as part of our risk mitigation strategy, noting that the health insurance can be a little bit more complex than other types of insurance due to the nature of health and the health industry and the regulations that are around it. The classical idea of insurance, if you're looking at property insurance, for example, is typically to be safeguarding against some event that may happen in the future, possibly not likely to happen in the future. But if it were to happen, it could be a catastrophe in terms of our finances, and therefore we might want insurance to safeguard us against that, such as, for example, our home burning down or something like that. With the health insurance, we have similar types of things, in that we could come down with some kind of disease, which could be very expensive, and we would want to safeguard against that event, which hopefully is not very likely to happen, but could happen. And we also have that other kind of stuff that could come up that would be paying for the more day-to-day type of services that could be more preventative type of stuff in terms of the doctor's visits and that kind of thing to determine whether or not the health insurance would be covering that kind of thing as well. So now we're going to be looking at what is a health insurance organization, an HMO, an individual who needs to secure health insurance may find a variety of health insurance providers with unique features. So clearly with all the complexity and that added level of regulation and different complexities with the kind of insurance that we're going to be getting and what it could cover, then that's going to add a lot of different types of insurances that could be available and we have to get some ID and wrap our minds around them so that we know what we're buying. So one type of insurance provider that is popular is the Health Insurance Marketplace, is a health maintenance organization, otherwise known as the HMO and insurance structure that provides coverage through a network of physicians. We've got our network of physicians that are going to be setting up that we need to be working within in general for the HMO, the health maintenance organization. How a health maintenance organization HMO works. Health maintenance organizations HMOs provide health insurance coverage for a monthly or annual fee. That's clearly how the insurance is typically going to be set up here. We pay the monthly or annual fee called premiums and then we're going to hopefully get the coverage, which will hopefully be risk of mitigation as well as possibly to be helping out with our normal kind of medical bills possibly. And HMO limits member coverage to medical care provided through a network of doctors and other health care providers who are under contract with the HMO. So these are some of the things that we have to get an idea of when we look at these big categorizations such as the health maintenance organizations, the HMO, how are they structured? Who can I go to within the structure within the network? How does the network work? Do I have more flexibility or less flexibility with regards to different types of structures? Do I need more or less flexibility when I'm looking at my health insurance options? And obviously what's going to be the impact of that flexibility on as well the cost of the health insurance. So these contracts allow premiums to be lower than the traditional health insurance since the health providers have the advantage of having patients directed to them. So now we've got because of the network structure, that's one way that you might be able to lower the cost. So that might could be a benefit with the lower premiums, but you have some more restrictions involved in who you're going to be getting help from. So they also add additional restrictions to the HMO's members. When deciding whether to choose an HMO insurance plan, you should take into consideration the cost of premiums out of pocket costs. Any requirements you may have for specialized medical care and whether it's important to you to have your own primary care provider. That's a lot of different considerations to be taken into consideration, of course. And one of the big ones would be that if you already have a care provider that you are dealing with and then you're kind of trying to switch up or purchase the insurance, then the question is, well, can I use that person in my primary care provider because I trust them? That's often going to be one of a person's major concern. If that isn't one of the concerns, then it might not be as big a deal to be using basically the network unless you're using or possibly using services that might be kind of outside the norm of the network. So an HMO is an organized public or private entity that provides basic and supplemental health services to its subscribers. The organization secures its network of health providers by entering into contracts with primary care physicians. So now you've got the primary care physicians, clinical facilities, and specialists. The medical entities that enter into contracts with the HMO are paid an agreed upon fee to offer a range of services to the HMO's subscribers. So now they've got their own kind of network that they're setting up here. So the agreed payment allows an HMO to offer lower premiums than other types of health insurance plans while retaining a high quality of care from its network. That's the hope, right, lower premiums and hopefully the same high quality of care. So the HMO, as it exists today, was established under the Health Maintenance Organization Act of 1973. Passed by former President Richard Nixon, the Act clarified the definition of HMOs as a public or private entity organized to provide basic and supplemental health services to its members. The law further requires that plans provide insured individuals with basic health care in exchange for regular fixed premiums that are established under a community rating. So rules for the HMO's subscribers. What are the rules that we got to be following in this thing? That's what I want to know. HMO subscribers pay a monthly or annual premium, which would kind of make sense for the insurance. We're paying the premium. That's how much it costs. That's what we're paying. So to access medical services in organizations, networks, network of providers to get access to the health care people that are going to be helping us up, but that's going to be in the network, but they are limited to receiving their care and services from doctors within the HMO network because that's who they have the contracts with. That's the whole point. You got to be within the network and that's the restriction. That's the thing that makes it a little bit more difficult. So however, some out-of-pocket network services, including emergency care and dialysis, can be covered under the HMO. Those who are insured under an HMO may have to live or work in the plant's network area to be a little eligible for coverage. In cases where a subscriber receives urgent care while out of the HMO network region, the HMO may cover the expenses, but HMO subscribers who receive non-emergency out-of-network care have to pay for it out-of-pocket. So that's obviously a restriction. So in addition to low premiums, there are typically low or no deductibles with an HMO. Instead, the organization charges a co-pay for each clinical visit, test or prescription. So we've talked about deductibles and co-pay, the deductibles being the item work. Basically, if you go in, you have to pay up to the deductible amount and then beyond that, the insurance kicks in. That's kind of more classical type of insurance when you think of like property insurance or something like that. You might think of this deductible because you might be insuring against an emergency and you might say, I can afford so much if an emergency happens, but I want to make sure that if things get out of control as medical costs can, that I'm covered in that event. That's the deductible as opposed to the co-pays here where you're basically paying part of the costs and the insurance company is kind of paying part of the costs. And when you're thinking about the kind of more preventative with a day-to-day kind of things, the tests and visits and whatnot to the doctor, as opposed to a big catastrophe that happens that's a sudden event type of thing that happens, then you would think that that co-pay thing is something that might be kicking in more than kind of the classical kind of deductible type of thing. So the co-pays in HMOs are typically low, usually $5, $10 or $20 per service. So notice we're not being represented here with the co-pays as like a percentage. So they're not saying, you know, for these certain things, which is the clinical visit, a test or a prescription, they're not saying we're just going to say that you have to cover 20% of it or something like that. They typically have the dollar amounts that are kind of laid out. So if you got $5, $10 and $20 and then anything over that, then you would think that the insurance company would pay and they might have some contractual agreement with the doctors, with the people that are doing the services on what the actual price would be. So in any case, thereby minimizing out-of-pocket expenses and making HMO plans affordable for families and employers. The role of the primary care physician, so that's going to be a key component, key tool, they're like the lunch pen to your healthcare situation. So the insured party must choose a primary care physician, that's the PCP, from the network of local healthcare providers under an HMO plan. A primary care physician is typically an individual's first point of contact for all health related issues. So if you want to, you know, you got a problem with your pinky toe and you want to go to a pinky toe specialist, but you can't just call up a pinky toe specialist. You've got to go to the point person, which is your primary care physician and they point you then to the pinky toe person and you're like, I could have called the pinky toe person myself before going to the primary care person, but no, that's how it works. That's how things work here. So this means that an insured person cannot see a specialist without first seeing the referral from their PCP primary care physician. However, certain specialized services are the pinky toe people covered? No, I don't think so. Such as screening mammograms do not require referrals. So if you have a screening mammogram or other certain specific areas that you might not need that referral, but you normally do. Specialists to whom PCPs, that's going to be the primary care physician, typically refer insured members are within the HMO's coverage, obviously. So they're going to be referring you to other people that are in the HMO. That's kind of the point for the HMO from their perspective. So their services are covered under the HMO plan after co-pays are made. So if a primary care physician leaves the network, subscribers are notified and are required to choose another PCP from within the HMO. So what if my primary care physician leaves or whatever thing or they die or something, God forbid, then you need another one. It's a portrait of where you're going to go. So HMO versus preferred provider organization, the PPO. This is the major two kind of components. You could have hybrids between these two and so on. But usually we're talking HMO versus the PPO. A preferred provider organization, otherwise known as the PPO, is a medical care plan in which health professionals and facilities provide services to subscribe clients at reduced rates. PPO, medical and healthcare providers are called preferred providers. That kind of makes sense. It's with the PPO, preferred providers and the PPO. The PPO participants are free to use the services of any provider within their network. So out-of-pocket care is available, but it costs more to the insurance. So again, if they're out of the network, then it could cost more, but you might have more flexibility than under the HMO in those cases possibly. So in contrast to a PPO, HMO plans require that participants receive healthcare services from an assigned provider. PPO plans usually have deductibles, while HMOs usually do not. So if you've got the PPO's, they've got that deductible model, meaning you've got to pay the amount upfront before you get into the insurance company kicking in after that point. Both programs allow for specialist services. However, the designated primary care physician must provide a referral to a specialist under the HMO plan. So if you're on the HMO side of things, then you've got the primary care person is taking more of an authoritative role in where you're going to go. So the PPO plans are the oldest and, due to their flexibility, relatively low out-of-pocket costs have been the most popular managed healthcare plans, partially because they're more flexible in that case. That has been changing, however, as plans have reduced the size of their provider network and taken other steps to control costs. So we've got the HMO versus the point-of-service, the POS. A point-of-service, that's a POS plan, is like an HMO in that it requires a policy holder to choose an in-network primary care doctor and get referrals from that doctor if they want the plan to cover a specialist's services. A point-of-service, that's the POS plan, is also like a PPO. So it sounds like kind of a hybrid thing here. Now we've got some hybrid stuff going on. It's kind of like a PPO in that it still provides coverage for out-of-network services, but the policy holder has to pay more for those services than if they used in-network providers. However, a POS plan will pay more towards an out-of-pocket network service if the policy holder gets a referral from their primary care physician than if they don't secure a referral. So you got a little bit from both here. They're trying to get the best from both worlds here. Is that possible? I don't know, but that's the attempt it looks like. So the premiums for a POS plan fall in between the lower premiums offered by an HMO and the higher premiums of a PPO, which is what you would expect, because of course the reason that the PPO and the HMO are the way they are is to give the kind of benefits they have, including the reduced premiums that are typically there for the HMO. If you start to give more flexibility, you're leaning more towards the PPO, which you would think would cost more, so you would expect the hybrid of the POS to be somewhere in the middle in terms of cost. So the POS plans require the policy holder to make co-pays, but in-network co-pays are often just $10 to $25 per appointment. So now you've got those co-pay situation, but they set the dollar amount and it looks like fairly reasonable dollar amounts at the $10 to $25. POS plans also do not have deductibles for in-network services, which is a significant advantage over the PPO's. Also, POS plans offer nationwide coverage with benefits patients who travel frequently. So if you're traveling all the time and you're outside of your network, that becomes a problem if you've got to find someone that's in your network when you're having the problem and the POS may be an option in those instances. So a disadvantage is that the out-of-network deductibles tend to be high for POS plans, so patients who use out-of-network services will pay the full cost of care out-of-pocket until they reach the plans deductible. So clearly, again, it's going to be somewhere in between in terms of the pros and cons. However, a patient who never uses a POS plans out-of-pocket network services would probably be better off with an HMO because of its lower premiums. So in other words, if you're not going to be using the benefits of the POS, which is trying to get kind of the best of both worlds, and you're okay, meaning with working within the network, it might be cheaper to have the HMO because that's the point of the HMO to kind of be cheaper by having the more restrictive network. Advantages and disadvantages of the HMOs. It's important to weigh the advantages and disadvantages of HMOs before you choose a plan just as you would with any other option. So we've listed some of the most common pros and cons of the program below. So advantages of the HMO. So the first and most obvious advantage of participating in an HMO is the low cost. That's the point. They're trying to get the network. They're trying to restrict things. They're trying to cut down the cost so they can lower the premiums. So you'll pay fixed premiums on a monthly or annual basis that are lower than the traditional forms of health insurance. These plans tend to come with low or no deductibles and your co-pays are generally lower than other plans. So you don't have that kind of deductible situation as much and you got the lower co-pays for your normal kind of visits and so on, which are set amounts that tend to be reasonable. It looks like lower than other types of plans, which is nice. Your out-of-pocket costs will also be lower for your prescriptions, billing also tends to be less complicated for those with an HMO. That's good because the billing in health care is just absurd. It's absurd. So there's also a very good likelihood that you'll have to deal with the insurer itself. That's because you have a primary care doctor. You must choose from who is responsible to manage your treatment and care. This professional will also advocate for services on your behalf. This includes making referrals for specialty services for you. So the quality of care is generally higher with an HMO. The reason is that patients are encouraged to get annual physicals and to seek out treatment early. So you might have that primary care physician being maybe more active possibly to help you to do that preventative care kind of stuff and check things out. Disadvantages of the HMOs. If you're paying for an HMO, you're restricted on how you can use the plan. You'll have to designate a doctor who will be responsible for your health care needs including your primary care and referrals. So you're kind of dependent on the one-point person, that primary care physician, which hopefully they're a good one because they're going to be the ones that are going to be pointing you everywhere else, which is kind of a little bit restrictive at the same time. This doctor, though, must be part of the network. So this means you are responsible for any costs incurred if you see someone out of the network. So if you're like, I'm not taking your advice, I'm going to someone. You might shoot if you don't like your primary care. You could try to change them, of course. But then if you just choose someone outside the network, then you might be having more costs to go to those person. So even if there's no contractual doctor in your area, so you'll need referrals for any specialists if you want your HMO to pay for any visits. So if you need to visit a rheumatologist or a dermatologist, your primary doctor must make a referral before you can see one of the plan to pay your visit. If not, you are responsible for the entire cost. There are very specific conditions that you must meet for certain medical claims, such as emergencies. For instance, there are usually very strict definitions of what constitutes an emergency. So you might say, well, you've got to pay for it because it was an emergency. But you can't just be like, I had a hangnail and that's an emergency kind of thing. They've got to be in the definition. So if your condition doesn't fit the criteria that HMO plan won't pay, the pros and the cons, lower out-of-pocket costs, including lower premiums, low or no deductibles, and low co-pays. Your primary care physician will direct your treatment and advocate on your behalf. Higher quality of care, cons, medical professionals must be part of the plan's network. So you've got to be within the network. You can't visit a specialist without a referral from your family doctor. Emergencies must meet certain conditions before the plan pays. What do you mean this hangnail is an emergency? I'll have you know. Do you know the pain that this thing caused me? What is an HMO insurance? HMO health maintenance organization insurance provides covered individuals with health insurance in exchange for monthly or annual fees. People pay lower premiums than those with other forms of health insurance when they visit a doctor's and other providers who are part of the HMO's network. What are HMO examples? Almost every major insurance company provides an HMO plan. For instance, Cigna and Humana provide their own versions of the HMO. Aetna also offers individuals two options including the Aetna HMO and the Aetna Health Network only plan. So what are the benefits of an HMO? The main benefits are cost and quality of care. People who purchase HMO plans benefits from lower premiums than traditional forms of health insurance. This allows insured parties to get a higher quality of care from providers who are contracted with the organization. HMOs typically come with low or no deductibles and only charge relatively low co-pays. HMO participants also also don't need referrals to get specialty services such as mammograms. What is the difference between an HMO and health insurance? Coverage under an HMO is generally pretty restrictive and comes at a lower cost to insured parties. Traditional health insurance on the other hand charges higher premiums, higher deductibles and higher co-pays. But health insurance plans are much more flexible. People with health insurance don't need to have a primary care physician to outline treatment. Health insurance also pays some of the costs for out-of-network providers. Why do HMOs have a bad reputation? There are several restrictions for those covered under HMOs, which is why these plans have such a bad reputation. So a lot of people when you talk about HMOs are going to say, ah, you're restricted to the network and so on. So there's pros and cons, of course, to the network. The whole point of the network and the restrictions is to try to lower the premiums. But the restrictions will, of course, be a downside to it. For instance, HMOs only allow insured parties to see individuals in their own network, which means they are responsible for the full amount of a visit to any doctor or specialists outside this group. The plan may also require individuals to live in a certain area. This means someone who receives medical services out of the HMO's network may pay for it themselves. The plans also require individuals to choose a primary doctor who determines the kind of treatment patients need. The bottom line, health insurance is an important consideration for every individual. Choosing the right plan depends on your personal situation, including your health, finances, and quality of life. You can choose from traditional health insurance such as the preferred provider organization or the HMO also known as the health maintenance organization. The HMO provides insured individuals with lower out-of-pocket costs, but more restrictive conditions, including the doctor you see. Make sure you weigh out the benefits and disadvantages of the plan regardless of what you choose.