12.3 Health Maintenance Organizations Overview
Unlike commercial insurers, Health Maintenance Organizations (HMOs) provide financing for health care plus the health care itself. HMOs are comprehensive health care service providers and are known for stressing preventive medical care and early treatment programs.
An HMO is NOT insurance - It is a maintenance contract on the insured's well-being.
Can an HMO offer or transact insurance?
No. An HMO can offer only HMO contracts approved by the Office of Insurance Regulation and cannot engage in any other type of activity, including insurance. However, an insurance company or service corporation, such as Blue Cross, can own or sponsor an HMO.
Purpose
HMOs generally function through the group enrollment system such as through employment, and premiums are paid through regularly scheduled paycheck deductions (paid in advance, whether the subscriber uses or has used the available services or not). Since services are on a prepaid basis, the theory is to reduce the amount of unnecessary hospital admissions, service duplications, and to promote early prevention and detection through preventive care measures. HMOs work with pools of providers and hospitals and are able to negotiate discounted fees through sheer volume. Agreements with health care professionals (providers) are contracted for on a prearranged, per capita basis. Capitation refers to the fixed amount the HMO pays to a physician or provider in exchange for rendered medical services.
In Florida, nearly all HMOs offer individual coverage as well as group coverage. A health maintenance contract details the arrangement between the member subscriber(s) and the HMO setting forth the services to be provided and the fixed fee or premium to be paid. It is the equivalent of the policy in traditional health care terminology. HMOs offer service contracts that have been pre-approved by the Office of Insurance Regulation.
Open-Panel HMOs
Open-panel HMOs work with a network of doctors who use HMOs on a part-time basis in their private offices.
Closed-Panel HMOs
Closed-panel HMOs consist of a group of physicians who operate out of an HMO facility as HMO employees. Sometimes these facilities have been referred to as "Doc-in-a-Box" because all the different physicians are located under one roof.
HMOs must hold an open enrollment period of not less than 30 days during every 18-month period.
