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Understanding HMO Structures

HMOs provide healthcare to patients through a network of physicians for a fixed monthly fee paid to doctors. This lowers out-of-pocket costs for consumers but restricts their freedom of choice of doctors. Doctors receive a capitated payment each month from the HMO to cover a patient's care, which some argue creates a conflict of interest by incentivizing doctors to withhold services to cut costs. Recent controversies have highlighted instances where doctors allegedly withheld treatment from HMO patients to reduce expenses.

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84 views1 page

Understanding HMO Structures

HMOs provide healthcare to patients through a network of physicians for a fixed monthly fee paid to doctors. This lowers out-of-pocket costs for consumers but restricts their freedom of choice of doctors. Doctors receive a capitated payment each month from the HMO to cover a patient's care, which some argue creates a conflict of interest by incentivizing doctors to withhold services to cut costs. Recent controversies have highlighted instances where doctors allegedly withheld treatment from HMO patients to reduce expenses.

Uploaded by

LayHunGrace
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Conceptual Framework of the Organization of HMOs

Health Maintenance Organization (HMO) - a radical concept that was developed as an


alternative to traditional indemnity and PPO insurance.
- provides a fixed payment to the physician known as
capitation every month in order to provide all medically necessary care which usually includes
office visits, referral to specialists, surgical procedures, and hospital care.

Significant lowering of out-of-pocket expenses - advantage provided by the HMO's to the


consumer of the health care
• no deductibles
• no payments to physicians except for a small co-payment usually five to twenty dollars per
visit.

Significant restriction of freedom of choice - disadvantage to the patient who is an HMO plan.
• patient must formally designate a primary care physician who is a member of the HMO
network and under most circumstances sees this provider only for all medical needs.

• Recently, the capitation method of payment used by HMO's has been the subject of
controversy due to a potential conflict of interest between patient providers.
• There have been numerous instances publicized where a provider is alleged to have withheld
medical services from an HMO patient in order to cut down on the cost of sharing for the
patient since the provider receives a fixed payment for the caring of patient.

Prepared by:

Sabando, Grace Ann C.

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