HEALTH MAINTENANCE ORGANIZATIONS

Some Responsibilities of HMO Medical Directors :

  • Analyzing and implementing quality standards
  • Involved in more difficult or complicated negotiations with providers
  • Utilization management such as determining if specific treatments are appropriate, necessary, or covered

A major factor in distinguishing HMO’s from PPO’s is financial risk. HMO’s typically assume risk, meaning they are held financially accountable for delivery of specified health care services within a predetermined financial amount. The risk is that the costs in delivering such health care may exceed the amount the HMO actually receives to pay for such services. In comparison, PPO’s typically assume no financial risk whatsoever. PPO’s tend to provide a contracted network of providers at a discounted rate as compared to HMO’s which provide a network of providers at a capitated rate. Accordingly, HMO’s create various contractual arrangements with providers to transfer such financial risk onto these providers.

Further, another difference between HMOs and PPOs is utilization management. Originally, PPOs did not use the gatekeeper system or case management or other such utilization management tools as commonly used by HMO’s.

Both HMOs and PPOs typically use a common language of services provided (as described in subsection “I”) and common and comparable costs per type of services provided (as described in subsection “II”). However, HMO’s also use the elements of Common Standards of Care (as described in subsection V) and Risk Management (as described in subsection VI) to shift financial risk onto Providers.

The effect of transferring financial risk from providers getting paid their costs plus a profit margin shifts the focus more onto keeping patients healthy in the first place. Under managed care, theoretically, there is a shift to preventive “health care” as compared to “sick care” where care is rendered to patients typically when they are sick. The ability to accurately determine quality controls to balance appropriate and necessary care is evolving in this lengthy process of determining common standards of care and appropriate risk management.

Responsibilities of HMO Medical Directors typically include: analyzing and implementing quality standards and utilization management such as determining if specific treatments are appropriate, necessary, or covered. Also, HMO Medical Directors may become involved in more difficult or complicated negotiations with providers. Typically, provider relations departments of HMO’s handle more routine and basic negotiations. PPO’s more recently employed medical directors and often on a part-time basis.

A major factor in distinguishing HMO’s from PPO’s is financial risk.