by Troy Norris

Created on: January 28, 2009

The term "HMO" is an acronym standing for Health Maintenance Organization. Their name is a reference to these organizations coverage for preventative medical expenses, like regular physicals, well baby visits, and immunizations and vaccinations. This distinction, while not necessarily accurate today, was considerable when HMOs were first formed and becoming prevalent immediately before and during the great depression. The model was favored at this time by customers for its affordability and by insurers because of the stead stream of revenue it provided. <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /

>

These early HMOs functioned as prepaid health plans offered to employees by their companies, where for a predetermined monthly payment the employee would receive coverage for a predetermined list of treatments and procedures with specific doctors and hospitals. But it wasn't until the passage of the Health Maintenance Organization Act of 1973 that the HMO as currently known was truly born. This legislation allowed for the distribution of loans and grants to start or expand an HMO, removed state restrictions on HMOs as long as they were federally certified, and most importantly required companies with more than 25 employees to offer some form of either federally certified HMO coverage or traditional health insurance to their employees.

As a type of managed care organization, HMOs share a common objective of reducing the overall cost of health care while also aiming to improve or maintain the quality of that care for their members. An HMO will seek to achieve cost savings for itself and members by first determining what procedures and treatments it will pay for, and these determinations can vary considerably from one organization to another, since HMO's are only required by law to provide some form of coverage in the following areas:

~In-patient and Out-patient Doctor and Hospital Services.

~Laboratory Testing.

~Diagnostic Services, such as X-rays.

~Services to Treat Health Problems.

~Preventive Care.

~Emergency Care.

~Diabetic Care and Supplies.

~Care for Serious Mental Health Issues.

~Certain Types of Rehabilitation.

~Some Healthcare or Nursing Home Care Following Hospitalization.

~Certain Hospice Care for Terminal Patients.

However, elective or experimental procedures are almost never included. HMOs then determine what they are willing to pay for every procedure and treatment, and only contract with hospitals and doctors that will accept their

• 1
• 2
• Next Page >>