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Pro's and Con's of HMO's...

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Running head: PROS AND CONS

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Pros and Cons of Health Maintenance Organization Plans

Ashford University Managed Care & Contractual Services MHA 628

October 14, 2013

PROS AND CONS

2 Pros and Cons of Health Maintence Organization Plans

In this paper, an excerpt from Beik's (2012) book, Health Insurance Today: A Practical Approach, will be reviewed, concentrating on the pros and cons of a particular managed health care plan, the HMO (health maintenance organization). Additional information regarding HMOs will also be discussed. The topics included will be, 1) the areas of opportunity/benefit, 2) the weaknesses/areas of improvement, 3) the innovation that is needed, 4) the management/governance system in place, 5) the impact on the patients, providers, and practitioners, and 6) recommendations. There are many benefits to enrolling in an HMO plan. However, consumers should be informed about both the advantages and disadvantages of HMO services before making a decision to enroll in an HMO. Beik's Pros and Cons Beik (2012) explains that HMO (health maintenance organization) plans are used to control costs through a managed treatment approach. Reducing unnecessary costs and services allows for HMO plan enrollees to be offered lower premium rates compared to those with basic idemnity health plans. With HMO plans, copayments and deductible amounts are also lower compared to those with basic idemnity health plans (Beik, 2012). HMOs help with costs to the consumers and also manage the care provided to patients. However, there are advantages as well as disadvantages.

PROS AND CONS Advantages Traditional or basic idemnity plans may require a large amount of paperwork to be filed by the consumer concerning health care charges. With HMOs, the paperwork required from the consumer is very limited or at times nonexistent. Traditional plans do not cover all health care services, such as prescriptions, eyeglasses, and dental coverage. HMOs do cover these services. HMOs also pay coverage for hospital stays that may be over the limits that are set by basic idemnity plans (Beik, 2012). Disadvantages The main disadvantage with HMOs is that enrollees are limited to using only providers and medical facilities that are within the HMO network. The HMO plan will only cover the costs of services received from HMO network providers. The exceptions are with emergency and urgent care cases. Choices are limited for HMO enrollees, which is an aspect that many consumers do not find appealing. In addition, HMO enrollees must designate a physician to be their primary care physician (PCP). Approval from the PCP or “gatekeeper” is required before obtaining services from specialists, getting surgical procedures done, utilizing certain medical technologies, and certain other services. This requirement is not a factor for those with basic idemnity plans. Lastly, if HMO enrollees travel outside of the HMO service area, they will not receive coverage. This is also with the exception of emergency and urgent care cases (Beik, 2012).

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PROS AND CONS

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Author The author, Beik, explains the basic advantages and disadvantages of HMO plans well for readers. Based on the author's descriptions, consumers can get a general idea of benefits they can receive from acquiring an HMO plan, and also it's limitations. However, it is recommended that the author should have also explained that by limiting enrollees to certain providers, the HMO is more like a system rather than just a plan. The HMO manages the care given to the patients, as well as helps with the healthcare costs. The Ins and Outs of HMOs It is important to mention the fact that though there seem to be more restrictions with HMO delivery systems compared to other managed care plans, HMO enrollees do have different options that HMO plans offer. One option is for consumers to enroll in the HMO with the pointof-service option (POS). This allows, for a higher premium cost, for enrollees to be able to selfrefer. This means that they can bypass the “gatekeeper” requirement and refer themselves to any specialist they prefer, or use any medical technology or health care service that they choose, without needing permission beforehand. The POS option also allows for the enrollee to use health care services and providers that are not within the HMO network, but for an increased cost (Beik, 2012). Consumers who find value in the HMO delivery system may prefer to use this HMO with the POS option instead of just enrolling into a comparable PPO (preferred provider organization) plan. Some studies have shown that the utilization of HMOs has not actually resulted in the reduction of medical spending. The reduction of medical spending was initially part of the reasoning behind the development of the HMO program. However, there is not much evidence

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that this expectation has been realized. On a good note, studies have shown that office-based physicians have increased their acceptance of new Medicaid patients as a result of the utilization of commerical HMOs. On a not-so-good note, the overall welfare of Medicaid enrollees has not been found to show improvements with the increased use of Medicaid-dominant HMOs (Herring & Adams, 2011). The regulation of HMOs is currently shared by both federal and state governments. This creates complexity. Exactly what level of government should actually have authority in this area should be addressed in order to develop proposals for improvement, based on the idea that one level of government may serve public interest better than the other level in this area (Herring & Adams, 2011). The area of weakness that was stated before about the non-realization of medical spending reduction with the HMO delivery system should be evaluated. The cost-controlling tools can be analyzed for their effectiveness, and if proven ineffective, policy changes can be proposed. The term, the “HMO effect” has been used describing the increased likelihood that HMO enrollees will use preventive health care services over those with traditional health plans or feefor-service plans. This concept may be a factor as to why statistics show that HMO enrollees are healthier than non-HMO enrollees. Medicare HMO enrollees have greater survival rates than those enrolled in fee-for-service plans. HMO enrollees are significantly more likely to be screened for different cancers. These preventive measures have resulted in earlier detection, which increases likelihood of survival (Kirsner, Ma, Fleming, Federman, Trapido, Duncan, & …..Wilkinson, 2010).

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HMO enrollees are more likely to frequent hospitals for routine care and also get radiation therapy for the treatment of cancers. It is possible that the use of case managers for HMO consumers has also contributed to their improved survival rates. Different health care delivery systems should be evaluated for effective areas of improvement. There may be a difference in promotion or access to preventive health care services for HMO enrollees compared to fee-for-service programs (Kirsner, et al, 2010). Conclusion Many may argue that the penetration of managed care plans has negatively affected the physician-patient relationship. With the restrictions placed on managed care plan enrollees, especially HMO enrollees, the physician-patient relationship may be suffering. However, health care delivery is no cheap-costing service and health insurance is essential for every American. The pros and cons of HMOs in particular were discussed in this paper. There are areas within the HMO service delivery system that have room for improvement, and there are also strong areas. These details were included in this document. Also included in this paper were recommendations, the impact of HMO enrollment, and study findings.

PROS AND CONS

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Beik, J.I. (2012). Health insurance today: A practical approach (4th ed.). Philadelphia, PA: Saunders. Herring, B., & Adams, E. (2011). Using HMOs to Serve the Medicaid Population: What Are the Effects on Utilization and Does the Type of HMO Matter?. Health Economics, 20(4), 446-460. Retrieved from ESCOhost database Kirsner, R., Ma, F., Fleming, L., Federman, D., Trapido, E., Duncan, R., & ... Wilkinson, J. (2010). Earlier stage at diagnosis and improved survival among Medicare HMO patients with breast cancer.... health maintenance organization. Journal Of Women's Health, 19(9), 1619-1624. doi:10.1089/jwh.2009.1768...