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The HMO Story. Emmanuelle Mirsakov Pharm.D. Candidate 2007 USC School of Pharmacy 12-1-06. USC. What is an HMO?. Health Maintenance Organization (a type of managed care organization)

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the hmo story

The HMO Story

Emmanuelle Mirsakov

Pharm.D. Candidate 2007

USC School of Pharmacy

12-1-06

USC

what is an hmo
What is an HMO?
  • Health Maintenance Organization (a type of managed care organization)
  • An organization that provides comprehensive health care to a voluntarily enrolled population at a predetermined price.
  • Contract directly with physicians, hospitals, and other health care providers
  • Providers offer their services at a discounted rate, in exchange, HMOs offer referrals
  • HMOs emphasize preventative care

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general overview of how it functions
General Overview of How It Functions
  • Members pay fixed, periodic (usually monthly) fees directly to the HMO and in return receive health care service from the HMO’s network of providers.
  • Out-of-pocket expenses are typically limited, as long as the member uses providers in the HMO’s network.
  • Most HMOs use Primary Care Physicians (PCP’s) as gatekeepers
  • Most HMOs cover basic health services such as physician services, inpatient/outpatient hospital services, emergency visits, referral services, laboratory services, and more.

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why and when were hmos developed
Why and When Were HMOs Developed?
  • Informal HMO structures existed as far back as 100 years ago
  • HMO Act of 1973 passed by Congress.
    • The governments attempt to move toward more disciplined control of health care spending and utilization of service
    • It set requirements for federal qualification and provided for grants and loan guarantees for planning, development, and initial operating costs for those HMOs that met the qualifying standards.
    • Encouraged enrollment among the public by establishing criteria for HMOs seeking federal qualification

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hmo act of 1973
HMO Act of 1973
  • 4 primary attributes:
    • Feasibility grants and low-interest loan programs made available to encourage interested parties to develop and build HMOs
    • The establishment of procedures through which health plans would become “federally qualified HMOs”
    • Inclusion of preventative as well as curative health care benefits
    • Requirements that employers offer federally qualified HMOs to their employees under certain circumstances

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who develops hmos
Who Develops HMOs
  • Employers
  • Labor unions
  • Medical schools
  • Hospitals
  • Medical clinics
  • Insurance companies

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what are the different types of hmos
What Are The Different Types of HMOs?
  • HMOs are organized on a physician basis
  • 5 types:
    • Group model
    • Staff model
    • Network model
    • Independent practice association (IPA) model
    • Mixed model

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what are the different types of hmos8
What Are The Different Types of HMOs?
  • Group model:
    • Contracts with one independent group practice of multispecialty physicians to provide health services, with care usually billed to the HMO on a fee-for-service basis (e.g. Kaiser Permanente)
    • Physicians are employees of the group practice and are generally limited to providing care for the HMO enrollees
  • Staff model:
    • Delivers health services through a physician group that is controlled by the HMO. The physicians are basically employed and paid by the HMO (e.g. Group Health Cooperative of Puget Sound)
      • The physicians practice in HMO owned facilities and primarily only see the HMO enrollees
      • Pharmacy services are through in house facilities or through network pharmacy mail order

USC

what are the different types of hmos9
What Are The Different Types of HMOs?
  • Network model:
    • Contracts with two or more independent group practices (no solo practices) to provide health services (e.g. Health Insurance Plan of Greater New York)
    • Pharmacy services are provided through in-house pharmacies, a contracted community network of pharmacies, and mail order.
  • IPA model:
    • Contracts with physicians from various settings (individual physicians or a mixture of solo and group practices) to provide health services; contracts with community hospitals, laboratories, diagnostic centers.
    • It is a loosely affiliated group of physicians organized to contract with HMOs and other managed care organizations
    • The HMO has no medical facilities of their own
  • Mixed model:
    • Combines elements of the other models

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what is the payment structure providers
What is the Payment Structure?Providers
  • Fee-for-service
    • For each unit of service provided, an associated fee is billed
  • Capitation
    • Health care providers are paid a fixed amount per member per month regardless of which services (if any) are provided [ adjusted for age and gender]
  • Pre-paid health plans
    • Employers pre-pay for expenses their employees will incur by paying a fixed monthly premium to an insurer. Physicians are then paid on a fee-for-service bases
  • * Take home message: with HMOs it is the health care provider that assumes the risk

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what is the payment structure patients
What is the Payment Structure?Patients
  • Premiums
  • Deductibles
    • A cost management tool
    • Requires patients pay up to a certain amount out of pocket before the insurance pays
  • Co-payments
    • A small fee charged for services or medications

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legal aspects of an hmo
Legal Aspects of an HMO
  • To be federally qualified, an HMO must be organized and operated and provide health services as prescribed by the law
    • Please see handout on standards
  • The HMO Act also mandated that employer contribution must be reasonable and assure employees a fair choice among health benefit plans
    • HCFA (Health Care Financing Administration) has a final rule for employer contributions to HMOs
  • Many states have laws meant to promote HMO development while ensuring the quality of care delivered by HMOs

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state and federal laws
State and Federal Laws
  • State laws:
    • Health plans are covered under the Department of Insurance (DOI)
  • Some Federal laws:
    • Employee Retirement Income Security Act of 1997 (ERISA)
    • Health Insurance Portability Act of 1996 (HIPPA)
    • Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)
    • Omnibus Budget Reconciliation Act of 1993 (OBRA ’93)

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hmo vs ppo
HMO vs. PPO
  • PPO: Preferred Provider Organization
    • An organization that arranges contracts between a select group of health care providers and purchasers of health care, but is itself neither a provider nor a purchaser
    • Payment is on a fee-for-service rather than a capitated basis
    • Strict utilization controls are combined with flexibility in benefit design and freedom of choice with respect to providers

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medicaid and medicare hmos
Medicaid and Medicare HMOs
  • In 1982 the Tax Equity and Fiscal Responsibility Act (TEFRA) was passed
    • Led to Medicare risk contracts, a way for government to introduce HMOs to control the health care costs for Medicare
    • Medicaid also offers HMO options
      • Most state managed care Medicaid programs have concentrated on moving only those recipients who qualify under the TANF regulation (young, healthy, female patients with small children)

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pro pharma
Pro Pharma
  • Survey of Pro Pharma employees:
    • What is an HMO?
    • What happens to a patient who has an inadequate primary care physician?
    • Will an HMO cover emergency services?
    • Why do some HMOs we deal with here limit the pharmacy you can go to, while other HMO plans do not?

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the moral of the story
The Moral of The Story
  • HMO plans have very strict guidelines, and restrictive coverage
  • A well-designed HMO model could be a large cost saver for employers
  • It is important to understand the big picture of HMOs because Pro-Pharma acts as a consultant for many HMO plans (e.g. BCBSRI; Blue Cross Blue Shield Rhode Island)

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don t let hmos make you cry
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Don’t Let HMOs Make You Cry!

'In sickness and in health? I'll need to run that by my HMO...'

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Do you have one saying ‘good luck getting your HMO to pay your claim?’

"I'm referring you to a specialist who knows how to deal with HMO's."

'Do you have one saying 'Good luck getting your HMO to pay your claim'?

I’m referring you to a specialist in how to deal with HMOs

USC

go usc teach the bruins a lesson
USCGo USC !!!!! Teach the Bruins a Lesson!!!!

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