Health Maintenance Organizations (HMOs)

  • Distinguishing factors of HMO’s:
    • Relationship exclusivity
    • Risk bearing (by the physician)
    • Financial relationship
      • Doctors must be cost conscious
    • Network of providers
  • HMO = no out of network services (providers) are covered
  • Staff model
    • Think Kaiser
    • Doctors are employees of the HMO
  • Group model
    • Plan contracts exclusively with one group of providers
  • Network model
    • Nonexclusive
    • Many small physician groups provide care
  • IPA model
    • No medical facilities
    • Contracts with individual providers

Capitation – system of payment in which a doctor is paid a set amount per month to provide “regular”/routine services for a given group of  people

  • Removes financial incentive for doctors to provide excess services (which fee for service encourages)
  • Get paid whether they do nothing or many services
  • Doctor is now at risk instead of insurance company

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