What is a Health Maintenance Organization (HMO)?

Walking into most Nigerian hospitals, you may have noticed most patients being asked which HMO they are registered with.

Or you may have noticed that some patients pay less for hospital care or make no payment at all, and when asked why, you will be told they are registered with an HMO. This may pique your interest as to what an HMO is and how it works?

What is a Health Maintenance Organization (HMO)?

A health maintenance organisation (HMO) is a type of health insurance plan managed by a private organisation. The organisation collaborates with a specific network of doctors, specialists, and hospitals to provide basic and preventive medical care services such as routine check-ups, vaccinations, and immediate medical care to their subscribers at an agreed fee.

It is one of the most commonly used health insurance plans in Nigeria. They are registered and regulated by the National Health Insurance Authority (NHIA) to help provide quality healthcare services at an affordable price.

HMOs provide health insurance coverage to their subscribers (also called enrollees or members) for a monthly or yearly prepaid fee (premium). Compared to other health insurance plans, these premiums are more affordable, thanks to their network approach. 

How does HMO work?

The following are the ways HMOs work:

• Each HMO has a list of hospitals and clinics they have entered into contracts with to be part of their in-network providers to provide healthcare services to their subscribers. They also offer different healthcare plans with different premiums (costs) and different coverage levels.
• These healthcare providers that enter into contracts with the HMO negotiate the cost of offering their services to their subscribers, which is usually at a discounted rate. This enables HMOs to offer their members lower premiums.
• The HMO markets its services to individuals and companies looking to provide healthcare insurance for themselves, their family members, or employees. After making a decision on the plan and the desired coverage levels, the individual or company pays the HMO premium to enrol in their insurance coverage for a set period.
• When it is time to get treatment, the subscribers choose healthcare providers from the HMO list or service providers while the HMO pays the providers directly for their services.

 Advantages and Disadvantages of HMO

HMO benefits in Nigeria

HMOs in Nigeria offer a lot of benefits to their members. As someone registered with an HMO:

• You will have the opportunity to select a primary care doctor and healthcare facility of your choice from the list of medical experts and facilities collaborating with the HMO.
• You will have a network of providers available to you, to coordinate your care.
• There is usually no limit to the number of primary care visits.
• The monthly or annual premiums are fixed and lower than other types of health insurance plans.
• Out-of-pocket expenses are usually lower when you have a HMO plan. The co-pay and cost of prescriptions for HMO plans are usually cheaper with little or no deductibles.
• Generally, HMOs provide a higher quality of medical care. This encourages patients to seek early treatment and go for routine check-ups.

Disadvantages of HMOs

• Patients can only get insurance coverage if they visit doctors and other facilities that are part of the network. This means that if you choose a doctor or facility outside the network, you will be responsible for whatever cost you incur, even if you are in an area where there is no contracted doctor.
• Patients will have to change doctors or health care providers if a primary care doctor or provider leaves the network.
• To see a specialist, patients must get a referral from their primary care doctor. The primary care doctor must refer the patient to a specialist within the plan’s network.

Factors to consider before choosing an HMO

Accessing proper medical care can be expensive, but with HMOs, getting good healthcare services is more affordable. There are different HMOs, and each has its care plans and list of coverage. It is important to choose a HMO that meets your medical care needs. You need to consider the following before signing up with any HMO:

• Cost and coverage benefits: to find the best deal, compare the cost of premiums for different HMO plans and the coverage benefits.
• Out-of-pocket expenses: factor in any costs not covered by the plan, such as co-pays or deductibles (out-of-pocket expenses).
• Provider network: go through the HMO’s network of doctors and hospitals. Verify if those providers have a good reputation.
• Consider your healthcare needs: based on your current health condition, you need to determine if you need regular check-ups or frequent specialist care. Find out if the HMO network you want to sign up with covers all the services you need and what the associated costs might be. You also need to determine if you will sign up for the HMO plan as an individual or for your entire family. If you will sign up for your entire family, you need to think carefully about the health condition and needs of the individuals in your family.
• Accessibility: Check if the HMO has convenient appointment hours and if the locations of the providers and care facilities on their network are easy to access.
• Customer service: Check online reviews, testimonials, and ratings to find out if the HMO is reliable and how well they serve their customers. 

You also need to find out if the HMO has 24/7 customer support available in case of an emergency. After all, the last thing you want when you are ill is a HMO that will stress you out or give you more headaches.

• Additional services: In addition to the basic medical coverage, some HMO plans offer additional services such as telemedicine services, wellness programs, and health education resources. Find out if the HMO you intend to sign up with offers any other extra services.

Frequently Asked Questions about HMO

1. Will I have cashback from my HMO if I don’t visit the hospital?

No. You will not be given cash back for not visiting the hospital. HMO is aimed at keeping healthy through preventive care. It is in your best interest to visit the hospital at least once a year, even if you do not have any complaints. You can also go for routine check-ups. There are many serious health conditions that may not present any symptoms at their initial stage. Having routine checks is a good way to detect these conditions early.

2. Is an HMO right for me? 

HMOs can be an excellent option for people who are generally healthy and who want to prioritise preventive care. If you have a chronic illness or are required to see a specific specialist, another type of health insurance plan may be more suitable for you.

3. Why do HMOs not offer a refund?

HMOs focus on preventative care and promoting wellness. Giving back refunds will encourage most people to skip preventive care in order to save money which may later result in expensive hospital visits.

Secondly, HMO premiums are usually based on community rating, meaning everyone in the plan pays a similar rate regardless of their individual state of health. This allows the cost of care to be spread among the insured.

Finally, refunding cash back to the subscribers will affect their cost planning and successful management of their budget.

4. Why does the cost of HMO premiums vary?

The cost of an HMO premium can vary depending on several factors, including:

• The level of coverage offered for each plan: HMO plans that offer more care coverage tend to charge a higher premium.
• The location: HMO premiums tend to be more expensive in areas with a higher cost of living.

• Age: Premiums increase as you get older because the older you get, the more care you need.
• Dependents: the number of dependents on your plan will affect the cost premium.

To get an accurate idea of HMO premiums in your area, you can visit the website of a specific HMO provider you’re interested in or contact the HMO directly.

Conclusion

It is important for everyone else to register for health insurance. HMOs can be a great option for those who are looking for comprehensive coverage at an affordable cost. It provides insured individuals with lower out-of-pocket costs but more restrictive conditions, including the doctor you are seeing.

You can determine which HMO plan is best for you by factoring in your health needs, affordability, coverage benefits, network coverage, provider reputation, and additional services. Whatever option you select, be sure to consider the plan’s advantages and disadvantages.

If you are already enrolled in an HMO, you can talk to a doctor from the comfort of your home on KompleteCare at no extra cost.

Already have an existing HMO plan? Sign up on KompleteCare with your HMO details and enjoy on-demand consultations at no extra cost.

 Consult a Doctor today using your smartphone and enjoy the convenience of telemedicine.

References

1. Adam Hayes, (2023).  Health Maintenance Organization (HMO): What It Is, Pros and Cons

2. National Health Insurance Authority,  (2022). About US – NATIONAL HEALTH INSURANCE AUTHORITY

3. Nigeria Health Watch, (2022). From A Scheme to an Authority – 5 Things You Need to Know About the New NHIA Act

4. Healthcare.gov. (n.d.).  Health insurance plan & network types: HMOs, PPOs, and more | HealthCare.gov

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