Health maintenance organization (HMO)

A health care system that assumes or shares both the financial risks and the delivery risks associated with providing comprehensive medical services to a voluntarily enrolled population in a particular geographic area, usually in return for a fixed, prepaid fee. Pure HMO enrollees use only the prepaid, capitated health services of the HMO panel of medical care providers. Open-ended HMO enrollees use the prepaid HMO health services but may also receive medical care from providers who are not part of the HMO panel. A substantial deductible, copayment, or coinsurance is usually associated with use of nonpanel providers.

HMO model types are described as:

• Group model HMO—An HMO that contracts with a single multispecialty medical group to provide care to the HMO’s membership. The group practice may work exclusively with the HMO, or it may provide services to non-HMO patients as well. The HMO pays the medical group a negotiated per capita rate, which the group distributes among its physicians, usually on a salaried basis.
• Individual practice association (IPA)—A health care provider organization comprising a group of independent practicing physicians who maintain their own offices and band together for contracting their services to HMOs, preferred provider organizations, and insurance companies. An IPA may contract with and provide services to both HMO and non-HMO plan participants.
• Mixed model HMO—An HMO that combines features of more than one HMO model.
• Network model HMO—An HMO that contracts with multiple physician groups to provide services to HMO members. It may include single or multispecialty groups.
• Staff model HMO—A closed-panel HMO (where patients can receive services only through a limited number of providers) in which physicians are HMO employees. The providers see members in the HMO’s own facilities. (Also see Sources and Definitions, Managed care; Preferred provider organization [PPO].)