Health maintenance organizations, or HMOs, provide contractually defined medical services to individual patients in the U.S. Advocates point out that HMOS may provide patients with superior care at a reduced price. Critics note that patients may not get the care they need because of restrictive contracts and the limitation of access to the best specialists and hospitals.
Four different types of HMO plans provide medical care ranging from comprehensive and exclusive medical care to care that – from the patient's perspective – might not differ greatly from the traditional individual patient-doctor relationship. These include the staff model, group model, network model and independent practice association HMOs.
What's an HMO?
An HMO is a comprehensive medical services delivery system that offers both hospital and physician services for a prepaid, fixed fee. One typical HMO, Kaiser Permanente's Senior Advantage Plan, offers most Medicare patients comprehensive care, including hospitalization, for the cost of the Medicare Part B premium. High income patients pay moderately more. Most outpatient visits cost from $0 to $40 each.
HMOs differ from another one of thee types of health insurance plans called preferred provider organizations, or PPOs. These plans will provide financial incentives for patients to seek medical care within a network of health-care providers but also allow members to obtain medical services outside the network at a higher cost. Patient care within the network costs significantly less than out-of-network care. Anthem and CIGNA are two of the largest U.S. PPOs.
Staff Model HMO
A staff model HMO employs health-care providers directly and often owns the health-care facilities used by the HMO. Staff model HMOs treat only their own members, but patients can get referrals when they need something the internal providers can't offer. Kaiser Permanente's Senior Advantage HMO is a staff model HMO.
Group Model HMO
A group model HMO creates contractual relationships with one or more group medical practices, which primarily treat the group model HMO's members. Slightly less than half of group model HMOs contract hospital services as well.
Network Model HMO
A network model HMO is similar to a group model HMO in that both types contract medical services for their members from one or more group medical practices. The difference between them is that the medical practice groups contracting with group model HMOs primarily treat that group model HMO's members. Medical practice groups contracting with network HMOS, on the other hand, may provide a substantial percentage of care to patients who are not network members. From a patient perspective, the difference between these two HMO types may not be apparent.
Independent Practice Association (IPA) HMO
An independent practice association HMO may contract medical services for its members with individual physicians or with an association that represents individual physicians. In both cases, the physicians are generally in solo practice and usually provide medical services to many other patients who are not members of the IPA HMO. Again, from a patient perspective, the differences between an IPA HMO, a network model HMO and a group model HMO may not be apparent.