What is a Health Maintenance Organization (HMO)?

A Health Maintenance Organization (HMO) is a health insurance plan that provides managed healthcare services to members in a specific geographic area. The HMO creates a network of healthcare providers by contracting with doctors, hospitals, and other specialty providers to provide services for their members.

HMO Models

Various HMO models have emerged to adapt to changing healthcare needs and regulations.

Staff Model

In the staff model, represented by institutions like Kaiser Permanente and Group Health Cooperative, the HMO owns and operates facilities, employs providers directly, and controls all medical services. Members can only see HMO doctors for care.

This integrated approach, such as Kaiser Permanente's electronic health record (EHR) system, enables efficient communication for seamless care coordination. Also, the staff model prioritizes preventative care, like routine screenings, to reduce chronic diseases and hospitalizations, thereby improving care and cutting costs.

However, patient choices are limited to network providers, further restricted by geographic gaps. High patient volumes in Health Maintenance Organizations lead to long appointment times, impacting timely care access, while providers face packed schedules and high productivity demands, contributing to increased physician burnout.

Independent Practice Association (IPA) Model

The IPA model contracts with independent physicians who maintain their own practices while also serving HMO patients. Hill Physicians Medical Group in California, an IPA, has a network of over 400 doctors and specialists, enhancing patient choice and access to medical services.

The IPA negotiates fees and contracts with the HMO on behalf of its members, potentially leading to more cost control.

When multiple providers operate under different management systems, unifying administrative processes like billing and coding becomes tricky, resulting in errors and delayed payments. Additionally, organizing care among separate providers demands increased dialog and time, with deviations in treatment protocols across doctors leading to variations in patient care.

Group Model

The group model HMO contracts with a multi-specialty physician group practice wherein physicians are employed by the group practice. The HMO and the physician group typically share profits or losses. Kaiser Permanente operates as a group model in certain regions.

The pros and cons mirror those of the staff model, including integrated care delivery, streamlined referrals, and limited provider choices.

The main difference lies in the fact that physicians are employed by the group practice and not the HMO, giving providers greater autonomy to make clinical decisions based on expertise and evidence rather than rigid HMO protocols or administrative constraints.

Network Model

The network model represents the newest type of Health Maintenance Organization. The primary distinction in this approach is that the HMO can contract with any combination of organizations, IPAs, hospitals, and individual physicians, forming a wider network of coverage.

The opportunities and obstacles of the network model overlap with the staff, group, and IPA models. But the network model uniquely uses a combination of parts to create a network tailored to have certain attributes and address specific concerns. PacifiCare and Humana use this hybrid approach to balance the strengths and weaknesses inherent in the other models. 

How An HMO Works

A Health Maintenance Organization is unique from other insurance plans in that it has its own network of providers. While many insurance plans have "preferred providers," they will still cover at least part of the cost of an "out-of-network" provider. The HMO, however, requires that patients choose an in-network Primary Care Provider (PCP) and see only those physicians and providers within their network without prior authorization.

There is also a procedural chain that must be followed to receive covered care. For example, if a patient starts experiencing frequent knee pain, instead of going directly to an orthopedic specialist (as they might with conventional insurance), they would first need to see their primary care provider. The PCP would determine if a specialist is needed and then provide a referral to an orthopedic doctor within the HMO network.

How Can TempDev Assist in Interactions with Health Maintenance Organizations? 

TempDev’s team of NextGen services can redesign and optimize your workflows to address interfacing and networking with the countless Health Maintenance Organization models. Achieve maximum revenue with efficient coding and billing with practices that accept HMO payers.

Contact us or call 888.TEMP.DEV to get the help you need to work with HMOs.