A preferred provider organization generally include utilization review, where representatives of the insurer or administrator review the records of treatments provided to verify that they are appropriate for the condition being treated rather than largely or solely being performed to increase the amount of reimbursement due. Another near-universal feature is a pre-certification requirement, in which scheduled (non-emergency) hospital admissions and, in some instances outpatient surgery as well, must have prior approval of the insurer and often undergo "utilization review" in advance. The aspects of utilization review and pre-certification are now widely used even in traditional "indemnity" plans, and are widely regarded as being essentially permanent features of the American health care system.
PPOs often require insurers to pay a claim within a certain timeframe in order to take the PPO discount, calculating the PPO discount and having the insurer pay the PPO's access fee is still one more step — and one more opportunity for mistakes and delays. Since PPOs have more power in their relationship with providers, they can still provide a benefit to insured patients. Uninsured patients may, however, be unable to obtain these discounts — even if they pay cash.
A health maintenance organization (HMO) is a type of managed care organization (MCO) that provides a form of coverage that is fulfilled through hospitals, doctors, and other providers with which the HMO has a contract. The Health Maintainence Organization Act of 1973 required employers with 25 or more employees to offer federally certified HMO options. Unlike traditional indemnity insurance, an HMO covers only care rendered by those doctors and other professionals who have agreed to treat patients in accordance with the HMO's guidelines and restrictions in exchange for a steady stream of customers.
Most HMOs require members to select a primary care physican (PCP), a family doctor or general physican who acts as a 'gatekeeper" to direct access to medical services. Absent a medical emergency, patients need a referral from the PCP in order to see a specialist or other doctor, and the gatekeeper cannot authorize that referral unless the HMO guidelines deem it necessary.
"Open access" HMOs do not use gatekeepers - there is no requirement to obtain a referral before seeing a specialist. The beneficiary cost sharing (e.g., co-payment or coinsurance) may be higher for specialist care, however.
HMOs monitor doctors to see if they are performing more services for their patients than other doctors, or fewer. HMOs often provide preventative care for a lower co-payment or for free, in order to keep members from developing a preventable condition that would require a great deal of medical services. When HMOs were coming into existence, indemnity plans often did not cover preventive services, such as immunizations, well-baby checkups, mammograms, or physicals. It is this inclusion of services intended to maintain a member's health that gave the HMO its name. Some services, such as outpatient mental health care, are limited, and more costly forms of care, diagnosis, or treatment may not be covered. Experimental treatments and elective services that are not medically necessary (such as elective plastic surgery) are almost never covered.
Other choices for managing care are case management, in which patients with catastrophic cases are identified, or disease management, in which patients with certain chronic diseases like diabetes, asthma, or some forms of cancer are identified. In either case, the HMO takes a greater level of involvement in the patient's care, assigning a case manager to the patient or a group of patients to ensure that no two providers provide overlapping care, and to ensure that the patient is receiving appropriate treatment, so that the condition does not worsen beyond what can be helped.
