Question

What are some of the ways that HMOs use to pay for primary care physician services?

Answer 1

An HMO is a health care organization created in effort to lower health care costs for you and for whomever is helping you pay for your health care such as employer or the government. The most obvious advantage to belonging to an HMO is cost. First, the premiums of managed care are usually lower than traditional health insurance, which can end up saving you money if you are now paying any of your own insurance costs. Secondly, HMOs and most other types of managed care do not require that you pay for your medical care up front, so there are no claim forms to fill out or waiting periods for repayment. Lastly, many HMOs require only a small co-payment for a visit to the doctor, a hospital stay, or a prescription. This is far less expensive than the usual 80 percent reimbursement of traditional health care insurance.HMOs operate on the concept of capitation — they receive a flat fee each month for each person they cover. While this creates a good mechanism for cost control, it can also lead to restrictive practices such as difficulty in assessing specialists or special drugs.

Mostly HMOs used bundled payments i.e all inclusive rates for both institutional and professional services.Another Method :Capitation is a physician payment method used by many HMOs but it's for specialist only.Primary care physicians are compensated on a fee-for-service basis. Fee-for-service reimbursement is meant to encourage primary care physicians to provide as much care possible for the patient because overutilizing primary care has significantly less effect on the budget than overutilizing the specialties.Income limitations necessitate maintaining a realistic budget and tight control of cost overruns. To obtain that control, there is a need to know exactly how much is being spent on primary care, specialists and ancillary care. The IPA spends 23 percent of its capitation dollar on primary care, 56 percent on specialists, 14 percent on ancillary services and 7 per cent on administration. As you can see, specialty care represented more than half of the capitated dollars. This was a significant reason why United Physicians capitated specialty providers. Another reason for capitating specialists stems from dissatisfaction with traditional utilization management, such as services that require prior authorization. Prior authorization is cumbersome — micromanagement of medical care that has minimal effect on utilization management. HMOs don't like it, nor do waiting patients.