What Is An HMO?

Health care coverage is a necessity for most people in the United States, but that doesn't mean that they understand it. Most people probably couldn't even tell you what kind of plan they have. People generally understand deductibles and premiums, but the rest of it is too complicated to understand. However, it doesn't have to be that way and if you are paying a lot of money every month towards a healthcare plan, than you would do best to know exactly what you are paying for. Although every plan is different, as a whole most plans fall into one of a few categories. The one that happens to be one of the most popular is called an HMO, or Health Maintenance Organization. Chances are pretty high that this is the type of coverage you have, and you probably recognize the name, so let's talk a bit more about what an HMO does and how you can best utilize their service.

Made popular in the 20th century in an effort to help control medical costs, an HMO is designed to save money for both the healthcare provider and the healthcare receiver. Health Maintenance Organizations save money by sticking to a specific network of doctors and medical professional, who in turn offer them lower costs. This basically allows doctors to have repeat business, which gives them an incentive to provide lower costs. Some of the more popular HMO's originated as charitable organizations before they became the providers they are today. Some well known HMO's are Blue Cross Blue Shield and Kaiser Permanente. Most people have probably at least heard of Blue Cross and Blue Shield.

The way this works is that the insured party picks a primary care practitioner that they plan on using for a majority of their routine medical needs. This builds a relationship between the provider, the patient, and the medical staff. If the primary care physician or practitioner cannot perform the treatment that you require, then they will give you a referral, which is basically and agreement that allows you to go beyond the network without incurring additional costs.

The second, and probably the most controversial way, that an HMO uses to save money is by telling medical professionals what services they feel are necessary and refusing to pay for those they think are not. This can become a very touchy area because what an HMO may feel is something unnecessary, a patient or doctor could think is crucial.

Even though a Health Maintenance Organization has flaws, overall the service they provide is cheaper and more efficient than other forms of healthcare. The military model operates in a very similar way. This model has come under scrutiny because of issues over disputed costs and perceived costs, but it still remains as the most prevalent form of coverage in the United States today. As healthcare continues to be changed and go through a reform process, this model will surely evolve into something more improved and efficient. In the meantime, I hope this helps you understand a little bit more about how an HMO works and how you can benefit from using one.