Health Maintenance Organizations (HMO’s), Essay Example

Health maintenance organizations (HMO’s) have been an important part of the push for managed care and the movement to help contain rising health care costs in the United States. HMO’s were implemented in 1973 with the Health Maintenance Organization Act (Brase, 1998), which required that when an employer as twenty-five or more employees, that they must offer a government-approved HMO-style option if the employees are offered a traditional health insurance option (Wikipedia, 2013).

The Classic HMO Model

HMO’s have evolved into many forms since they were first implemented, but the “staff model” HMO remains as the classic or original model and was first implemented by Kaiser Permanente (CEIS, 2007). In this system a patient who is a member of an HMO selects a primary care physicians (PCP) who acts as a “gatekeeper” and who guides patient access to medical services (Wikipedia, 2013). In this style of HMO, physicians receive their salary from the HMO for taking care of the patients within that HMO and they exercise a great deal of power over a patient’s access to other healthcare providers such as specialists, with the end result being managed healthcare costs (CEIS, 2007). Another way which HMO’s try to manage medical costs – and this can set them apart from many traditional insurance plans – is the emphasis they put on preventative care to help avoid costlier, more serious conditions. HMO’s will often cover services such as mammograms, yearly physicals, procedures like mammograms, and well baby check-ups that emphasize preventing illness rather than having to treat it once the illness develops (Wikipedia, 2013).

Capitation and its Role in HMO’s

Capitation is an important part of the HMO and is defined as the “amount of money a primary care physician receives every month for members that have selected that physician as their PCP” (Rosenberg & Backus, 1998). The capitation can be primary, which refers to a PCP being paid directly by the HMO for services rendered to that HMO’s members, or secondary, which involves a relationship between the PCP and other healthcare providers such as specialists which is managed by the HMO and in which the secondary specialist is also paid by the HMO based on the PCP’s patient membership (Wikipedia, 2013). What is often covered under these capitation rules are things like office visits, in-office procedures, inpatient visits, supplies and care management (Rosenberg & Backus, 1998).

Regulation of HMO’s

HMO’s, begun by Congress in the 1973 HMO act are subject to both federal and state regulations. At the state level, HMO’s are licensed with certificates of authority (COA’s) and regulations can vary widely from state to state (Wikipedia, 2013). However, the federal government also exercises a good deal of authority over the HMO’s: for instance, in the 1980’s, the federal government began a push to usher Medicaid patients throughout the country into HMO’s, with the result that by 1997, over half of Medicaid patients had been inducted into some form of an HMO (Brase, 1998).

For better or worse, health maintenance organizations are now firmly entrenched into our healthcare system, and it is necessary to have a good understanding of them in order to fully comprehend the complexities of healthcare management in this country.

Works Cited

Brase, Twila. (1998) HMO’s Rise Driven by Government, not Market. Institute for Health Freedom. St Paul

Continuing Education Insurance School (CEIS). Categories of Managed Care (2007). Continuing Education Insurance Publishing: Hudson, FL

Rosenberg, I. & Backus, M. (1998). Managed Care Contracting: Primary Care Physician Capitation. New York, New York: Managed Care Resources, Inc.

Wikipedia Online Encyclopedia . Capitation. (2013).. Wikipedia. Retrieved from http://en.wikipedia.org/wiki/Capitation_(healthcare)

Wikipedia Online Encyclopedia. Health Maintenance Organization (2013) . Wikipedia Retrieved from http://en.wikipedia.org/wiki/health maintenance organization

Wikipedia Online Encyclopedia . Capitation. (2013).. Wikipedia Wikipedia Online Encyclopedia . Capitation. (2013).. Wikipedia