You'll need referrals for any specialists if you want your HMO to pay for any visits. So if you need to visit a rheumatologist or a dermatologist, your primary doctor must make a referral before you can see one for the plan to pay for your visit. If not, you're responsible for the entire cost. There are very specific conditions that you must meet for certain medical claims, such as emergencies.
For instance, there are usually very strict definitions of what constitutes an emergency. If your condition doesn't fit the criteria, then the HMO plan won't pay. HMO or health maintenance organization insurance provides covered individuals with health insurance in exchange for monthly or annual fees.
People pay lower premiums than those with other forms of health insurance when they visit doctors and other providers who are part of the HMO's network. Almost every major insurance company provides an HMO plan.
The main benefits are cost and quality of care. People who purchase HMO plans benefit from lower premiums than traditional forms of health insurance. This allows insured parties to get a higher quality of care from providers who are contracted with the organization.
HMOs typically come with low or no deductibles and only charge relatively low co-pays. HMO participants also don't need referrals to get specialty services such as mammograms. Coverage under an HMO is generally pretty restrictive and comes at a lower cost to insured parties. Traditional health insurance, on the other hand, charges higher premiums, higher deductibles, and higher co-pays.
But health insurance plans are much more flexible. People with health insurance don't need to have a primary care physician to outline treatment. Health insurance also pays some of the costs for out-of-network providers. There are several restrictions for those covered under HMOs, which is why these plans have such a bad reputation.
For instance, HMOs only allow insured parties to see individuals in their own network, which means they are responsible for the full amount of a visit to any doctor or specialist outside this group. The plan may also require individuals to live in a certain area, This means someone who receives medical service out of the HMO's network must pay for it themselves. The plans also require individuals to choose a primary doctor who determines the kind of treatment patients need.
Health insurance is an important consideration for every individual. Choosing the right plan depends on your personal situation, including your health, finances, and quality of life. You can choose from traditional health insurance, such as the preferred provider organization, or the HMO, also known as the health maintenance organization. The HMO provides insured individuals with lower out-of-pocket costs, but more restrictive conditions, including the doctor you see.
Make sure you weigh out the benefits and disadvantages of the plan, regardless of what you choose. Medical Mutual. PPO Insurance Plans. Kaiser Permanente. PPO Plans - what are the differences? Health Insurance. Your Privacy Rights. To change or withdraw your consent choices for Investopedia.
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Understanding Deductibles. There is need for the Federal Government through the National Health Insurance Scheme to provide more effective guidelines for HMOs, supervise and monitor the implementation of such guidelines for HMOs to improve on their roles. Nigeria adapted the HMO system in The founding fathers of the scheme believed that the social system of the country is marred with inadequacies, without checks and balances.
Based on that, policy makers in health suggested a system of health insurance with HMOs participating as agents of the NHIS to purchase health services from public and private providers. HMOs are private sector driven and are expected to close leakages that might be arising from poor management by the public sector [ 4 , 5 ]. The Nigeria health system was initially publicly financed with it attendant problems. The National Health Financing Policy and Strategy of Nigeria recommends that there should be a split between funding and purchasing and the powers for both should not reside in the same agency.
It also recommends that there should be a split between purchasing and provision and the powers for these functions should not reside in same agency.
Hence, HMOs exist within the insurance scheme to help drive the purchaser-provider split and promote efficiency and sustainability that are not commonly found in the public sector. HMOs purchase care at the primary, secondary and tertiary levels of healthcare. The referral system through the HMOs starts from the primary to secondary and then to the tertiary care. The system is integrated in such a way that NHIS supervises and monitors all the activities that go on in the social health insurance scheme.
There are three levels of HMOs that operate in the country. They are those with National Structure, which are allowed to operate in all the States of the country including the Federal Capital Territory; those that operate within the confines of each of the six geopolitical regions of the country north central, northeast, northwest, southeast, southwest and south-south ; and those who operate within a given State.
Initially, it was envisioned that health insurance would pool funds for the providers who manage patients based on predetermined arrangement, also known as prospective payment system [ 6 ]. This method brought about moral hazard, adverse selection, and unwarranted screening of patients in the interest of the providers [ 7 ]. To mitigate such inadequacies in health insurance cover, provider-purchaser split was introduced [ 8 , 9 ].
HMOs are expected to function based on health insurance principles, which include generation, pooling, purchasing and benefit packaging. Generation is carried out through taxes, levies, out-of-pocket payment whereas pooling requires organizing the generated funds into a financial basket that gives opportunity to hedge against unexpected healthcare spending [ 10 ].
Pooling was also viewed as health system function whereby collected health revenues are transferred to purchasing organizations [ 11 ].
Purchasing refers to holding the fund and ensuring disbursement to actors in the insurance system [ 12 , 13 ], whereas benefit packaging refers to what should be included or excluded as health services and requirements for referral, co-payment making etc. Purchasing is indeed a function of the HMOs [ 17 ]. The questions that come to mind are, do HMOs perform their roles accordingly? Are they acquainted with their responsibilities? Do HMOs aim at ensuring that stakeholders are satisfied with their roles?
Analysis of roles of HMOs has been done in Nigeria, although the study was mainly a supply-side analysis with interest in processes and roles of actors in implementation of NHIS [ 18 ].
However, the extent that different stakeholders are satisfied with the roles of HMOs is not clearly understood. Unlike previous studies, the present study incorporated the demand-side by investigating the level of satisfaction with roles of HMOs among beneficiaries and other actors in social health insurance scheme in Enugu State. This is because they have income structure that makes deductions for insurance premium easy.
A partially mixed sequential dominant status design was employed in the study [ 19 , 20 ]. That is, the quantitative phase surveys preceded the qualitative phase interviews see Fig.
A partially mixed sequential dominant status is a method of research in which both qualitative and quantitative methods are used, but the one that draws more information is said to be dominant. Hence, the dominant phase in this study was the quantitative phase because it had more variables of interest that were generated and analyzed.
A pre-tested interviewer-administered questionnaire was used to collect quantitative data whereas in-depth interviews IDIs were used for qualitative data collection.
The data provided empirical basis for understanding the roles of HMOs followed by thematic analysis in the qualitative phase. The use of mixed methods approach ensured validity of the findings through triangulation [ 21 ]. QUAN in the Figure below represents quantitative method, while Qual represents the qualitative data collection method.
The study was conducted in Enugu urban. The study was undertaken in Enugu state, southeast Nigeria. Enugu State with a population of 4,1 million [ 22 ], has Enugu metropolis as its capital city. It shares a border with Abia and Imo States in the South. It is flanked to the east and west by Ebonyi and Anambra States respectively and in the north by Kogi and Benue States. The native population is entirely Igbo with a sprinkling of Igala near the borders with Kogi State.
Other ethnic groups are however well represented in the State with a predominance of Hausa and Yoruba communities. The study population was the Federal civil servants in Enugu metropolis, and they were approximately 18, in number [ 13 ]. Federal Government staff, which by virtue of their job are enrolled with the NHIS, were approached and interviewed.
Hence, the central point of this study is investigating the roles of HMOs in the implementation of the scheme. The sample was selected from a representative sample of the people that are in the formal sector.
A sample size of employees was used for the study; determined using Cochran formula corrected for finite population [ 23 ]. The sample of beneficiaries was selected using a 2-stage process.
First, employers were selected with probability proportionate to size number of employees. Then, a random sample of employees was selected for the beneficiary survey. Nigerian Police Force has employees which are posted to police stations throughout the State. A distinct work location e. The number of clusters was determined by feasibility. We thought it was logistically possible to survey greater than 12 clusters in total. Each employer in the NHIS list was treated as a cluster with the exception of the police, where each police station and the central authority was treated as a cluster.
The sample was stratified to ensure that the largest employers e. There were 4 strata altogether:. All other the assumption being that these are mostly administrative offices or teaching institutions complemented.
Clusters were selected with probability proportionate to size number of employees , and within a cluster a fixed number of people were sampled. This gave a self-weighting sample small employers have a lower probability of being sampled, but within that unit, each individual had a larger probability, and these cancel each other out to allow an unweighted analysis.
Because the marginal cost of sampling additional individuals was very low once an institution had agreed to be included in the survey, we proposed to target to survey 30 clusters X 20 people each in total. Because there were some small employers with fewer than 20 people, this excess sampling allowed us to get closer to the target sample size of The number of clusters per stratum was selected by identifying the number of workers, percentage of workers and number of clusters selected.
The procedure for selecting clusters was by constructing a list of all the clusters with the number of employees in each. This required updating the list from NHIS, and also visiting the large employers Army, Police, and Hospitals and getting the breakdown by location Army and Police and department hospitals.
Once a cluster was visited, the aim was to select 20 employees. If there were fewer than 20 employed, everybody qualified to be interviewed. If they were more than 20, we selected 20 using systematic random sampling. To do this:. Choosing a random number between 0 and 11 e.
The study examined the level of satisfaction with HMOs among the beneficiaries who are Federal staff. The regression model was thus given as:. Socio-economic index was determined using Principal Component Analysis PCA to ascertain equity in health care delivery among the enrolees. The level of equity was determined using Concentration Index CI. Concentration Index measures the level distribution of the variables of interest across the socioeconomic groups.
CI with a positive value indicates that variable of interest is distributed in favour of the rich. If calculated CI has negative value, it means that variable of interest is in favour of the poor.
This was done using variables on asset holding, consumption pattern and income of respondents. SPSS version 21 was used to enter the data and subsequently transferred to Stata version 12 software for analysis. This enabled the authors to understand procedures of the scheme. IDIs were conducted with the key actors in the scheme. Those included in the interviews were key decision makers at the State NHIS; HMO managers that registered providers in Enugu or their representative; directors of a sample of provider facilities or their representatives in Enugu.
Because there are a good number of providers, those who were randomly selected but could not be reached were systematically replaced. HMO managers in the State 8 of them and 15 healthcare providers were approached and interviewed.
The managers of the CBHI were also included in the interview as they were expected to provide valuable information about the roles of HMO. The main objective of these interviews was to determine roles, objectives and extent of involvement of HMOs in the scheme. What made the respondents feel satisfied or not satisfied with HMOs were determined through the interviews.
Respondents who were health care providers were coded P1, P2 etc. Average number of people in household was 4.
Average age of respondents was The respondents were divided into quartiles representing their socioeconomic groups as seen in Table 2. In Table 3 , more than half Almost one-third of the respondents These can be seen in Table 4. Table 5 shows logistic regression model of level of satisfaction of the respondents with the roles of HMOs.
The overall estimate is statistically significant showing Chi, 2 prob. Table 6 presents a breakdown of participants interviewed. Their other functions include fishing out irregularities in the system and reporting same to the NHIS for enforcement and discipline. HMOs are to allocate funds to players in the scheme particularly the health care providers. They are meant to provide access to health which requires having doctors and other personnel available in health facilities.
Although HMOs have specific functions as mentioned above, such functions are noted to be deficient in performance. CB1 Community informant number 1 for instance said that to a great extent,. Further to that he said: For their services to be retained, they would definitely have to do more. With respect to their functions and getting things done properly and providing required monitoring and inspection of the facility, CB1 said they were not doing well.
Respondents said that HMOs in their functions should take care of enrollees based on the regulations, and that the system should be such that enrollees are not allowed to change their primary healthcare more than twice a year as HMOs should keep close monitoring. But does that really happen? One would ask. Their other function includes fishing out irregularities and reporting such to NHIS for enforcement.
Again it was observed that HMOs perform the function of purchasing and allocating of funds to the players in the scheme as well as conducting quality assurance and sanctioning of providers that default. They are also meant to conduct interactive forum with the enrollees and request them to provide the list of defaulting health providers.
Without HMOs, such function would not be effectively performed. According to him,. We have schedule of how the money is being divided. Part of that money goes for the capitation, which goes to the health care provider. That is how this capitation is done. She also said that they go out to have interactive forum with the enrollees, who make their complaints, and more often they request them to mention the hospitals involved and they try to sort out whatever issues they may have.
P8 said that in terms of functions of HMOs, it includes coming to the facility for inspection, which happens in some cases. Further to that, P8 said that:. HMOs are wired to make money out of the system. To him , their job is not to see to patient and what should be done to save the patient.
Their interest is only on how they can make money and that is what our people do not understand. It is those that are health workers that is ogbuebule , their job is to attend to the sick. They take care of the sick that is what they do. That of HMOs is how to make money. So you should not put such people to be taking care of the sick. They only want money". The investigation shows the level of understanding of the functions of HMOs among the respondents.
They generally demonstrated good knowledge about the functions of HMOs. It is however important to know that good knowledge about the functions of HMOs would help in determining how much they have been able to achieve their objectives. This is because examining how far they have been able to achieve their objectives will also show that they are either performing their functions or not.
It was also necessary to buttress the arguments on the functions of HMOs. The study also looked at how much HMOs have been able to achieve their objectives. The NHIS guidelines spelt out what every stakeholder should do. By that, it is objective of the HMOs to ensure that providers do not complain about remittance of their capitations or fee for service.
Their objectives also include wider coverage and ensuring universal health coverage and making sure that enrollees do not complain about quality of service and out-of-stock syndrome. To achieve the set objectives, there should be some form of monitoring to ensure that policy guidelines are followed by the stakeholders particularly the HMOs who are referred to as purchasers.
Negative judgment about the roles of HMOs indicates that objectives are not really achieved. Inability to achieve objectives might stem from disregard to existing contracts between stakeholders which in most cases is not acceptable. It might also be that flow of funds as agreed by the parties is not happening. Feelings of the beneficiaries and the way the entire system functions could also determine the level to which objectives are being achieved.
Again number of enrollees at any point in time is a measure of achievement. With respect to remittance of capitation as agreed with NHIS, HMOs are not performing as required, which means their performance is below expectation. Respondents expressed concern about the flaws of HMOs in achieving their objectives. One of them was systemic failure of the scheme occasioned by inadequacies of HMOs.
Achieving the objectives as it were can only happen if there are laid down principles that must be followed. Notwithstanding, some others like P13 said that the system is not completely a flop as assumed. Others also maintained that HMOs are only trying to achieve their objectives. At times they owe. They owe. In some states, the only plans available in the individual market are HMOs, with deductibles as high as several thousand dollars. HMOs are considered one of the more affordable health insurance choices, yet costs vary based on the plan, region, and whether you enroll through your employer or as an individual.
HMOs only cover in-network services. Care is typically managed by a primary care provider. Enrolling in an HMO can be a great option to help minimize your healthcare costs so long as you stay within the network. Become familiar with the plan to see if it makes sense for your individual health situation. For example, if you have a medical condition that requires you to see many specialists or your favorite doctor is not in the network, you may be better off with another option.
If you have an HMO, always ask questions to confirm that all healthcare professionals you see are in the HMO network and you've received any needed referrals so that services are covered. Sign up for our Health Tip of the Day newsletter, and receive daily tips that will help you live your healthiest life. Health maintenance organization HMO. Alliance for Health Policy. Network-model HMO. Kaiser Family Foundation. Updated October 8, Health insurance coverage of the total population.
Your Privacy Rights. To change or withdraw your consent choices for VerywellHealth. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page.
These choices will be signaled globally to our partners and will not affect browsing data. We and our partners process data to: Actively scan device characteristics for identification. I Accept Show Purposes. Table of Contents View All. Table of Contents. How HMOs Work. What Is an HMO? Copay vs. Need for Referrals Referrals have long been a feature of HMOs, but some HMOs may drop this requirement and allow you to see certain in-network specialists without one.
Recap If you have an HMO and get care out-of-network without getting a referral from your primary care provider, you won't receive coverage unless it's a medical emergency or another exception that's been approved by the HMO. Recap HMOs focus on preventive care and managing chronic conditions. Was this page helpful? Thanks for your feedback! Sign Up. What are your concerns?
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