While health care costs continue to spiral out of control, providing such health care to consumers gets more difficult the less affordable it becomes. HMOs attempt to address this with a referral system and a capitation arrangement for contracted doctors, as was discussed in chapter 16. Here, we will look more closely at these organizations in the context of Florida statutes and the rules and regulations of the Office of Insurance Regulation.
How an HMO Operates
Right now, HMOs operate almost exclusively as a group enrollment system where each consumer pays a premium each month to prepay for services covered by the HMO. The consumer may or may not use those services, but by prepaying in this way the services are very affordable when they are needed, thereby encouraging consumers to see doctors and even take advantage of preventive measures. By encouraging preventive medicine in this way, the expectation is that all of the subscribers will benefit and more people will be healthier with affordable early detection.
HMOs offer savings based on:
- prevention,
- early detection,
- volume discounts with providers, and:
- capitation agreements with providers.
Definitions
To acquaint you with the different requirements and restrictions for HMOs and the duties of the representative who enrolls HMO members, the following definitions are required.
Health maintenance contract
This is what an individual receives when enrolled in an HMO. It's not a policy or a certificate, but a health maintenance contract.
Insolvency
This was discussed in Chapter 29. It means that the company is "belly up", or can not afford to pay claims and cover liabilities. Remember that the Department of Financial Services is the liquidator and rehabilitator when this happens.
Provider
Provider is any physician, hospital, organization or anyone else that legally provides health care services in Florida and is contracted with the HMO.
Subscriber
This is the individual consumer who purchases coverage from an HMO plan.
Capitation
This is the fixed monthly amount paid to health care providers in an HMO.Co-payment********
Co-payment is the specified dollar amount that subscribers pay for services. These amounts are typically small and must be approved by the Office of Insurance Regulation.
What is a "prepaid health clinic"?
As the name implies, this is an actual clinic, so a specific location, where services are provided to members, and they only deliver basic health services whereas HMOs cover broader types of care.
Basic health services are restricted to the following under the law:
- emergency care,
- physician care other than hospital inpatient physician services,
- ambulatory treatment and
- preventive health care services.
Prepaid health clinics may not use the words "HMO", "insurance," "surety," "mutual" or "casualty" since it's actually a specified location. Although these are not allowed to be called HMOs or insurance, they are still regulated by the Office of Insurance Regulation.