HMO Health Insurance

HMO Insurance Meaning

A health maintenance organization (HMO) is a health insurance plan that provides coverage through a selected network of providers (doctors, hospitals, and other providers). It generally doesn’t cover out-of-network care except in emergencies.

HMOs are mandated to offer the same benefits as Original Medicare only with different rules, restrictions, and costs.

How HMOs work

The providers in an HMOs network do sign an agreement to provide services at discounted rates. This ensures HMOs are in control of costs, hence out-of-pocket costs are kept lower in comparison to other types of health plans.

To be a member, HMOs may require you to reside or work within its service area to qualify for coverage. This means you must use providers of the HMOs network within the area. There only exceptions to this rule are during emergency care or through a referral.

Use in network Providers

Primary Care Physician (PCP)

You can choose and enroll during the Open Enrollment i.e. yearly period when people select or switch their health insurance covers.

On joining the HMO, you will be provided with a list of primary doctors or Primary Care Physicians (PCP) to choose from. The PCP will coordinate your care.

To visit a specialist or another doctor, you must be referred by your PCP. However, you won’t need a referral during emergency care or;

• When seeing a specialist(obstetrician/gynecologist)
• In need of physical therapy
• Obtain certain medical equipment(e.g. wheelchair)

Some plans do offer a point-of-service (POS) option. This option allows the usage of out-of-network providers for specific services without PCP referral or prior authorization (you will be charged more for this up to your out-of-pocket limit).

Prescription Drugs

HMOs usually have a list of prescription drugs that doctors on their network may prescribe. If a drug is not available on the list, the PCP is allowed to prescribe a similar drug available.

However, HMOs must cover any drug prescribed for a chronic, disabling, or life-threatening illness even if it’s not on the list. If a drug is taken off the list mid-cover, the HMO will cater for it until the plan’s next renewal date.

Step Therapy

Step therapy is also practiced. This is where the PCP will first prescribe cheaper, less risky drugs and then move to more expensive, riskier drugs if the former is not effective. PCPs are at liberty to ask for an exception to the step therapy.

Cover for Mental health issues and substance abuse

Plans must cover mental health conditions and substance use disorders with the same urgency as covering medical or surgical services.

They should not make it harder to cover treatment for mental health conditions or substance use disorders.

Request for an IRO review if your HMO is mistreating or denying treatment.

Costs

HMOs charge a monthly premium on top of Part B premiums, or may only choose to cater to your Part B premium. Expect s higher premium if you wish to have Part D coverage.

You are expected to pay

• Premiums If you belong to the HMO via your employer, this will be deducted from your monthly paycheck. Some employers foot all or a part of the premium.
• Copayments vary by service. Expect a higher bill for emergency or specialized care. Some HMOs expect the member to foot 50 percent of the total cost of services.  If you reach 200 percent of yearly premiums, the HMO won’t charge copayments for the rest of the calendar year.
• DeductibleThis is the total out-of-pocket that must be paid before the health coverage kicks in. Copayments and coinsurance constitute the deductible (premiums don’t).

The maximum out-of-pocket limit for HMOs allowed is $7,550 in 2022. Plans are at liberty to set lower limits.

HMOs are not allowed to charge more than the Original Medicare charges, especially for dialysis, chemo, and skilled nursing facility (SNF) care.

However, HMOs will charge high copayments for certain services, including;

• Home health care
• Durable Medical Equipment (DME), and
• Hospital Inpatient care.

Benefits

Your insurance plan may offer additional benefits which include vision, hearing, and/or dental care.

Types of HMOs

There are three main types of HMOs.

• Staff model:

The health care professionals are direct employees of the HMO and will only treat patients covered by the HMO.

• Group model: 

The health care professionals are not direct employees. They have a solo contract with the HMO to treat their patients. They will offer care at a fixed rate. PCPs and other professionals will only treat patients covered by the HMO.

• Network model: 

The health care professionals are not direct employees. They don’t have a solo contract with the HMO. They can see patients with the HMO plus other patients with other types of insurance.

HMO Insurance Dental

This plan only allows the use of dentists in the Dental HMO (DHMO) network for your dental care.

patients will coordinate their care through a single Primary Care Dentist (PCD).

This cover mostly won’t cover Out-of-network costs. However, should there be an emergency, the plan will only cover the evaluation fees.

• On signing up, the plan will assign a PCD (go-to for all dental care) that’s closer home. Some covers will allow you to change your PCD at any time.
• DHMO covers preventive care (routine checkups and cleanings-free once a year for principal and dependents).
• You have to pay a percentage of the expenses (Copayments) on receiving covered services.
• You will need a PCD referral for specialty dental care (excluding pediatric or orthodontic).
• The plan only covers emergency evaluation (or where required by law) in out-of-network services, and this requires prior administrator approval. The plan doesn’t cover the actual treatment.
• Funds in the health care flexible spending account (HSA) can be used to pay copays.

HMO Insurance Vs PPO

Bottom line

Enrolling in this plan might be a great option to access affordable healthcare especially if you plan to stay within the network.

When deciding to enroll in an HMO, always consider;

• Doctors in the network. Having your doctor in the network is always a plus.
• Hospitals already in the network
• Consider your total costs(premiums and copayments)
• Deductibles and Total out of pocket costs