One of the most common types of insurance providers are known as a Health Maintenance Organizations (often described by the acronym HMO).

When working with patients in a Medical Office, there are many different types of Insurance options. Each type of insurance has it’s own set of advantages and disadvantages, and it is important to understand these so you can assist your patients when they are using their insurance.

Health Maintenance Organizations first gained popularity in the 1970s and changed the landscape of the healthcare world in America. They are organizations that contract with all types of providers (general providers, specialists, labs, hospitals) to create a patient service network from which the patient can choose or to whom the primary care physician can refer to.

The main benefits of the Health Maintenance Organizations to patients is lower-cost healthcare. They have access to lower premiums and little (or sometimes no) co-pay obligations. However, on the downside they must access all healthcare through an assigned primary care physician (PCP) who essentially functions as a gatekeeper to control costs to the insurance company.

Before patients can see a specialist, the PCP must refer them. Even with the required referral in hand, patients are still restricted to providers within the HMO’s network.

In some instances, such as in emergencies, a HMO will pay for care provided by a non-HMO physician. A HMO will also pay for treatment when it is medically necessary and when the plan’s providers are normally unable to offer that treatment.

Instead of deductibles, Health Maintenance Organizations often charge a minimal amount, known as a co-payment, for each treatment or doctor’s visit. HMO members often pay a nominal co-payment of $5, $10, or $20 for office visits, tests, and prescriptions.

Health Maintenance Organizations typically have no deductibles. Coupled with low co-payments, HMOs are able to minimize out-of-pocket costs. This is designed to encourage members to seek medical treatment early, before health problems become severe.

Some HMOs have no out-of-network benefits. The cost for the out-of-network services provided may fall on the doctor or the patient. If a PPO-only provider sees an HMO patient, the PPO contract may force the provider to absorb the cost of patient treatment.

It is important to note that if the provider has no contract with the company at all and sees an Health Maintenance Organizations covered patient, then the patient may be fully responsible for all costs.