hcs235_r3_Week3 Health Insurance Matrix

Origin: When was the model first used?

What kind of payment system is used, such as prospective, retrospective, or concurrent?

Who pays for care?

What is the access structure, such as gatekeeper, open-access, and so forth?

How does the model affect patients? Include pros and cons.

How does the model affect providers? Include pros and cons.

Health maintenance organization (HMO)

Example:

HMOs first emerged in the 1940s with Kaiser Permanente in California and the Health Insurance Plan in New York. However, they were not adopted widely until the 1970s, when health care costs increased and the federal government passed the HMO Act of 1973, which required that companies that offered health insurance and employed more than 25 employees include an HMO option. The law also supplied start-up subsidies for these health plans (Barsukiewicz, Raffel, & Raffel, 2010).

HMOs often operate on a prospective or prepaid payment system where providers are paid a capitated fee—one flat amount per beneficiary—per month, quarter, or year, regardless of the frequency or quantity of services used (Barsukiewicz, Raffel, & Raffel, 2010). In staff model HMOs, such as Kaiser Permanente, providers are salaried, but this arrangement is the exception, not the norm.

In group policies, where health insurance is provided through the employer, the employer pays the insurance company a set amount agreed upon in advance. According to Austin and Wetle (2012), employers covered 83% of premium costs for single coverage and 73% for family coverage in 2009. The employee, or beneficiary, paid the difference. Then, the health insurance company pays the provider directly.

Example:

HMOs have the strictest access structure, called a gatekeeper model, where patients must have a primary care physician (PCP) through whom all care is routed. PCPs decide which diagnostic tests are needed and control access to specialists through referrals, deciding when it is necessary for a patient to seek more expensive specialty care (Barsukiewicz, Raffel, & Raffel, 2010).

HMOs are usually the least expensive health plans, offer predictable costs for health care, the least administrative paperwork, and cover preventive care (Barsukiewicz, Raffel, & Raffel, 2010). However, HMOs also restrict direct access to specialists by requiring referrals by a PCP, requiring patients to see a provider in the HMO network, and often not covering more costly procedures or care options, because care is managed to control excessive or unnecessary care. Providers gain if they provide less care (Austin & Wetle, 2012). This incentive could affect patient-provider trust.

Advantages of HMOs are that a known amount of revenue is guaranteed and the patient population number is fixed (Austin & Wetle, 2012). In addition, if providers use less in services than the capitated fee, they are paid each month to cover the cost of care, they keep the difference. Conversely, if care costs exceed the contracted amount, then the provider must assume that financial risk, which puts providers at a disadvantage if they care for a sicker patient population (Austin & Wetle, 2012). HMOs also restrict the covered services, which limits autonomy in medical decision-making.

Indemnity

Consumer-directed health plan

Point-of-service

Preferred provider organizations

Health savings account