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HMO History: Not Your Grandfather’s (or Your Father’s) HMO Part II
So, we’ve talked about where HMOs came from, and why they are important to you, but can you identify the differences between those plans your Grandfather knew as “HMOs” and the ones available to you today? Let’s explore!
How HMO Works: Then and NowIn the Beginning: Health maintenance organizations, or HMOs, were designed based on those early pre-paid plans that were offered by employers to their employees. For the most part, those early plans focused on hospitalization and care for chronic illnesses and injuries. They were more like plans we call “catastrophic” plans today.
The plans only covered care provided by the doctors and hospitals participating in the plan. If a person went to another doctor or hospital, they paid for their care themselves or were treated at low-income hospitals. Some doctors would let people pay them a little at a time (and some even took food or farm animals as payment.)
Now: Today’s HMO is still built on the foundation of care provided by a certain network of doctors and hospitals, but it is also focused on lowering costs by looking at how people pay for care, where they get it and who makes the decisions. At its core is the idea that offering preventive care for a lower copayment, or even free, can keep members from developing health problems that would need a great deal of care. It is this focus on preventive services, such as immunizations, well-baby checkups, mammograms, or physicals, which gave the HMO its name.
Buying HMO: Then and NowIn the 1970s: When the HMO became a reality with the passing of the HMO Act, the HMO was created by health care providers that contracted with employers to offer the coverage to their employees. Most HMOs were locally based, meaning members got coverage for providers in the communities where they lived and worked. It wasn’t until the late 1970s when insurance companies began partnering with provider HMOs or offering their own HMOs that the plans broadened to larger provider networks and expanded areas of coverage.
Now: Most HMOs today are offered and managed by insurance companies such as Blue Cross and Blue Shield of Texas. They may offer a variety of HMOs, including a lower cost option that covers providers in a certain market area, such as one just for Houston or Dallas-Fort Worth. A larger HMO may cover certain providers across the state, and may even offer “away from home” benefits for people who travel or who have kids in college in another area or state.
All HMOs continue to only cover, or pay, for care when using certain providers in the HMO’s provider “network.” You may be able to buy an HMO plan that only covers doctors and hospitals in a certain health system. You can still buy an HMO plan that only covers providers near where you live and work. And many employers, particularly those with multiple locations across the state or country, will still cover a broader HMO.
In some instances, you may be able to buy an HMO with some coverage when you see providers not in the HMO’s provider network. The out-of-network benefits would be limited, but are worth it if you want the peace of mind of knowing you have more options when you need care.
1Lone Star Legacy: The Birth of Group Hospitalization and The Story of Blue Cross and Blue Shield of Texas; Samuel Schaal, copyright 1999.
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