HMO And PPO

HMO And PPO Health Insurance Providers

There are several types of groups that may sponsor HMOs, some of which are:

• Medical schools or associations
  
  
• Labor unions
  
  
• Physicians
  
  
• Hospitals
  
  
• Insurance companies
  
  
• Labor groups
  
  
• Consumer groups
  
  
• Service organizations (Blue Cross/Blue Shield)
  
  
• Government entities

Most HMOs restrict membership to a narrowly defined group. For instance, a labor union might limit enrollment to active members of their union. HMOs are required to provide the following basic health care services:

• Physicians’ services
  
  
• Hospital inpatient services
  
  
• Outpatient medical services
  
  
• Emergency services
  
  
• Preventive services
  
  
• Diagnostic laboratory services
  
  
• Diagnostic and therapeutic radiology services

Many HMOs may provide the following, but are not required to do so:

• Prescription drugs
  
  
• Vision care
  
  
• Dental care
  
  
• Home health care
  
  
• Nursing services
  
  
• Long-term care
  
  
• Mental health care
  
  
• Substance abuse services

Those who would like supplemental services may purchase them from the HMO only as an addition to the basic health care services that the HMO provides.

Other Factors To Consider With An HMO

• Co-Payments

HMO members may be charged only nominal amounts for basic services in additional to the original monthly payments.

In some cases there may be no additional payments for services. All details are spelled out in a descriptive document which is known as either the certificate of coverage or evidence of coverage.

• Gatekeeper

HMOs most often have this type of system wherein a primary care physician must be selected who in turn will authorize all care for a member including referrals to specialists.

• Twenty Four Hour Access

Normally members have 24 hour access to the HMO.

• Open Enrollment

This term can apply in one of two different ways. An employee sponsored group has a set time period each year when employees may choose to enroll or remain enrolled or change plans. The second meaning is a period each year when an HMO must advertise to the general public on an individual basis.

• Nondiscrimination

When HMO services are offered to a group, the HMO may not refuse to cover an individual member of the group due to pre-existing health conditions. This practice is much different from traditional insurers where adverse conditions may preclude enrollment.

• Complaints

HMOs must be set up to handle coverage complaints and care complaints. HMO members must receive a document that spells out how complaints can be registered.

• Prohibitive Practices

In addition to non-discrimination against group members based on their health status during enrollment, HMOs are not allowed to cancel or dis-enroll members because of their current health status or the amount of usage of health services. HMOs are also not allowed to use words that may imply that the HMO provides insurance in the traditional manner.

Preferred Provider Organization (PPO)

Preferred Provider Organizations (PPOs) are another attempt to reduce medical costs. This is an arrangement whereby a selected group of independent hospitals and medical practitioners in a certain area agree to provide certain services at a prearranged rate.

The organizers and providers agree upon medical service charges that are generally less than the provider would charge patients not associated with the PPO.

These differ from HMOs in that the providers are paid on a fee for service basis rather than receiving a flat monthly amount and the organizer or contracting agency might be:

• Traditional insurance companies
  
  
• Blue Cross/Blue Shield
  
  
• Local groups of hospitals
  
  
• Local groups of physicians
  
  
• An existing HMO
  
  
• Large employers
  
  
• Trade unions

Those people who will receive services select a preferred provider from a list that the PPO distributes. Usually the choices are more extensive with a PPO than a HMO. Sometimes PPOs and HMOs are lumped together and called a managed care system. One characteristic still exists concerning regulation, however.

HMOs increasingly have to meet state requirements as well as standard established by federal government. PPOs are less stringently regulated since any group that can agree on the arrangements can call itself a PPO.

More Health Insurance Information

Health Insurance | Accident Policies | Disability Insurance | Medical Expense Insurance
Expense Benefits | Health Insurance Benefits | Major Medical | Major Medical Policies
Health Insurance Providers | HMO and PPO | Group Health Insurance
Group Health Types | Health Care Insurance | Health Insurance Glossary