HMO Key Terms

Knowing HMO jargon is half the battle in getting good coverage

Some business owners offer employees several choices of health insurance plans, with plans offered by health maintenance organizations (HMOs) being the least expensive. However, learning the health insurance system and properly following all rules is essential. For example, if you visit an "out of network" doctor, you could end up paying full price for the services. Understanding some of the key terms that are associated with HMOs will help users make the most of their health insurance plans.

 

Health maintenance organization (HMO)

A health maintenance organization is a type of managed health system whereby users prepay for their medical services in the form of monthly premiums. Patients choose a primary care physician, who acts as a type of "gatekeeper" for their health care. Patients who need to see a specialist must get a referral from their primary care physician. HMOs save on costs by focusing on preventative care.
Try: AgencyInfo.net offers a comparison of HMOs, preferred provider organizations (PPOs) and point-of-service plans.

Primary care physician

Primary care physicians are patients' first point of contact whenever they need health care. PCPs can be general practitioners, or they can specialize, usually in pediatrics or internal medicine. They work to diagnose issues early before major problems arise.
Try: eHealthInsurance.com offers a description of primary care physicians and what they do.

80/20 policy

HMOs often offer an 80/20 policy, which means that the insurance covers 80 percent of the cost of a procedure and the patient is responsible for the remaining 20 percent. Likewise, a 70/30 policy would mean that the insurance covers 70 percent of the cost while the patient pays for 30 percent.
Try: Dan Abrams Health Insurance Service discusses 80/20 policies on his website.

Medical network

HMOs work with a medical network, or a network of doctors that accepts the HMO's insurance. As long as patients see an "in-network" doctor, the insurance plan covers the costs as the insurance agreement stipulates. If a patient sees an "out-of-network" doctors, costs are higher to the patient.
Try: Cigna explains how its medical network plans work.

Co-pay

A co-pay is the amount that the patient must pay for services rendered under the HMO plan. Routine office visits, for example, generally cost a patient $10-$20.
Try: Investopedia offers a good description of co-pay.

Preventative care

HMOs tend to focus on preventative care as a way to lower costs. Many offer programs aimed to help patients with general wellness in an effort to prevent patients from getting sick in the first place.
Try: For examples of wellness programs and how they work, visit the Anthem Blue Cross Blue Shield website.

Copyright © 2011 Business.com, Inc. All Rights Reserved.

---