A health maintenance organization (HMO) is a prepaid health plan . As an HMO member, you pay a monthly premium. In exchange, the HMO provides maintenance care for you and your family, including doctors' visits, hospital stays, emergency care, surgery, lab tests, x-rays, and therapy.

A health maintenance organization arranges for this care either directly in its own group practice and/or through doctors and other health care professionals under contract. Usually, your choices of therapy, diagnosis, doctors and hospitals are limited to those that have agreements with the HMO to provide care. However, exceptions are made in emergencies or when obviously medically necessary. Keep in mind, though, that all decisions made by the HMO are on financial grounds first and then medical criteria is used to support their decision.

Because HMOs receive a fixed fee for your covered medical care, it is theoretically in their interest to make sure you get basic health care for simple problems before they become serious at the lowest possible cost to them. Often, the HMO shifts the financial risk for your care to the doctors they contract with by paying a fixed monthly payment for each patient under the doctors care. This is called "capitation". Any treatment a patient receives under this system decreases the HMO's or the doctor's income. This replaces a possible incentive under a fee-for-service system to provide unnecessary care, with an incentive to do too little. Alternatively, the incentive is to provide the patient with the least quantity or least expensive care possible. HMO coverage typically includes preventive and early detection care, such as office visits, immunizations, well-baby checkups, mammograms, and physicals. The range of services covered vary in HMOs. Some services, such as outpatient mental health care, often are provided only on a limited basis, and more costly forms of care, diagnosis, or treatment may not be not covered.

In some HMOs, doctors are salaried and they all have offices in an HMO building at one or more locations in your community as part of a prepaid group practice . In others, independent groups of doctors contract with the HMO to take care of patients. These are called individual practice associations (IPAs) and they are made up of private physicians in private offices who agree to care for HMO members. You select a doctor from a list of participating physicians that make up the IPA network. These organizations are typically also capitated. (See above) If you are thinking of switching into an IPA-type of HMO, ask your primary doctor if he or she participates in the plan.

In almost all HMOs, you either are assigned or you choose one doctor to serve as your primary care doctor. This doctor monitors your health and provides most of your medical care, referring you to specialists and other health care professionals as needed. Every time the doctor refers a patient for care, he is compared to the costs incurred by his collegues. If his costs are too high by referring too many patients then he is penalized either financially by with-holding his payments or terminated from his contract with the HMO. In HMO terminology, you are known as a "member" and a group of members under a physician's care is known as a "panel". Members usually cannot see a specialist without a referral from their primary care doctor who is expected to manage the care the panel receives.

The first HMO in the United States was Ross-Loos Medical Group established in 1929 in Los Angeles, California. The largest is Kaiser Permanente, with 8.3 million members in nine states and the District of Columbia. (Kaiser Permanente is structured into eight regional units; the largest is the organization's Northern California unit, which, even taken just by itself is still the largest HMO in the country.)

Starting in 1990, Switzerland has founded several HMOs which at the moment include some 10 percent of the Swiss population. The percentage would be much higher if there were HMOs in all regions. This is not possible because there are regions where the population density is too low to establish HMOs (mountains).

In general, HMOs have a negative public image due to their appearance as restrictive; for example, the case of some U.S. HMOs refusing to pay for a second day of hospital care for new mothers. HMOs have no legal responsibility to their members because traditionally HMOs could not be sued for malpractice under ERISA statutes. For example, if you are denied coverage for an MRI and subsequently die due to delayed diagnosis then the most your estate could collect from the HMO for their wrongdoing is the cost of the MRI. The HMO, in legal terms, does not practice medicine. Therefore, they cannot be sued for malpractice. They merely control the pursestrings.

HMOs

• Aetna
• CIGNA
• Wellpoint

See also

• Preferred provider organization
• Managed care
• Medicare
• Medicare (United States)
• Publicly funded medicine
• Blue Cross
• Blue Shield
• Kaiser Permanente

External links

• America's Health Insurance Plans - a trade organization
• Medicare HMO Web Site
• State of California - 2003 Quality of Care Report Card
• The high costs of for-profit care - an article that discusses the excesses of HMO CEOs