Most Common Types of Managed Care Organizations
HMO: Health maintenance organization. A combination of a health insurer
and a healthcare delivery system. An organization responsible for providing,
or arranging for, the provision of covered health services to an enrolled
population through affiliated providers who are reimbursed under various
methods. A health plan that places at least some of its providers at risk
for medical expenses and that typically utilizes primary care physicians
as gatekeepers. The HMO is further defined by how it relates to its participating
physicians. For example:
- Staff Model HMO: The HMO employs physicians directly, and those
providers see members in the HMO's own facilities. The HMO may contract
with selected subspecialists in the community for infrequently needed health
services.
- Group Model HMO: The HMO contracts with a multispecialty physician
group practice to provide all physician services. Physicians are employed
by the group practice and not by the HMO.
- - Captive Group Model: The physician group practice exists only
to provide services to the HMO's members.
- - Independent Group Model: The HMO contracts with an existing,
independent, multispecialty physician group to provide physician services.
Often the physician group is the sponsor or owner of the HMO.
- Network Model HMO: The HMO contracts with more than one group
practice, possibly including staff physicians, to provide health services
to members. Practices may be broad-based, multispecialty groups or several
small groups of primary care physicians.
- IPA Model HMO: The HMO contracts with one or more associations
of physicians in independent practices (Independent Practice Association
or IPA), and/or one or more multispecialty group practices. The IPA, in
turn, contracts with individual physicians. Physicians are members of the
IPA but remain individual practitioners and continue to see their non-HMO
patients and maintain their own office and staff.
- - Direct Contract Model HMO: The HMO contracts directly with
individual, private practice physicians in the community, rather than through
an intermediary such as an IPA or a medical group. Otherwise it is similar
to IPA model plans.
- Mixed Model HMO: A hybrid of these other models. A managed care
plan that mixes two or more types of delivery systems. Examples include
network/IPA combination, staff/IPA combination, IPA/group mix, and network/staff
mix.
HMOs are further defined by the exclusivity of the practices of physicians
in their provider networks.
- Closed Panel: The HMO contracts with physicians on an exclusive
basis for services and those physicians are not allowed to see patients
for another managed care organization. Physicians must be members of the
group practice to participate in the HMO. Examples include staff and group
model HMOs.
- Open Panel: The HMO contracts with private physicians to deliver
care in their own offices. Participation may be open to all community physicians
who meet the HMO's selection criteria. Examples include direct contract
and IPA model HMOs.
The number of group and staff models has decreased over the past ten years,
due to resistance to the use of closed panels of physician providers where
choice of physician is limited to the HMO's panel of providers. Network
model HMOs partially solved this concern by widening the physician base
to more than one group and allowing members to use off-panel providers in
specific circumstances. IPA models then began to dominate the market. The
IPA allowed physicians to continue to practice in their own settings, thus
facilitating physician and patient recruitment. The IPA did not require
as much capital as was needed to start a group-based plan. IPAs were more
organizationally compatible with the existing healthcare system. The trend
seems to be moving away from the exclusive use of one model type, as evidenced
by a steady growth of interest in mixed model HMOs.
HMOs are generally organized in accordance with a state "HMO Act."
Many HMOs are federally qualified, although this is not a requirement for
operating under state law. Federally qualified HMOs have marketing advantages
through a federal mandate which requires employers to offer HMO coverage.
The significance of federal qualification has decreased as HMOs have become
more widely accepted.
Other types of managed care organizations have developed, in addition
to HMOs.
PPO: Preferred provider organization. A group of providers who contract
with a sponsoring group to provide healthcare services to covered persons.
It is neither a provider nor a purchaser of healthcare services in and of
itself. Patients may go to the physician of their choice, even if that physician
does not participate in the PPO. However, the patient has financial incentives
to use participating providers, since the out-of-pocket costs assumed by
the patient usually are greater when care is obtained outside the preferred
provider network. The provider network is generally chosen on the basis
of performance and the PPO provides some type of utilization review.
POS: Point-of-service plan. Combines the features of an HMO and a
PPO. Members are enrolled in an HMO but have the option to go outside the
network for an additional cost, such as an additional copayment and/or deductible
or a lower level of coverage. The covered person must select a primary care
physician who acts as a gatekeeper and controls referrals for specialty
and hospital services. Members do not have to choose how to receive services
until they need them.
EPO: Exclusive provider organization. A provider network similar
to a PPO, but the covered person must seek services from participating providers
exclusively in order to be eligible for benefits. A member must pay the
entire cost of any care obtained outside the EPO network of providers. Some
EPOs require a primary care gatekeeper system. EPOs are generally regulated
under insurance statutes rather than HMO regulations.
ASO (or TPA): Administrative service only (or third party administrator).
A contract between an insurance company and self-funded plan where the insurance
company processes claims and administers benefits on behalf of the plan
on an administrative services only basis. The insurer does not assume underwriting
risk.
Single Service Plans: Generally operate like an HMO or PPO but offer
care for services only in a single healthcare area such as mental health,
dental, or vision.
PHO: Physician-hospital organization. Organizational entities formed
between hospitals and physicians that allow for cooperative activity while
permitting a level of independence to the participating parties. Usually
the venture is developed to pursue managed care risk contracts. The main
difference among the various PHO forms is the ownership