How Does an HMO Work?
HMO plans are very different from traditional health
insurance plans. HMOs work on the premise that you can
avoid future medical problems by "maintaining" your
health now. HMOs usually offer you broader coverages and
lower out-of-pocket expenses than traditional insurance,
but you must use the HMO's health care providers.
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An HMO may operate only in certain counties and zip
codes called a "service area." It is
important that you live within your HMO's service
area since you must travel there for all medical
treatment. If you live elsewhere, but work within an
HMO service area, you may still be able to join,
depending on how the HMO defines service area.
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If you travel a lot, are outside the HMO service
area for long periods of time, or have a child
attending college outside the service area, an HMO
may not be the best choice for you. Most HMOs only
provide coverage for emergency treatment if you are
outside the service area.
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In an HMO, you must get all medical care from their
network of health care providers
(doctors, hospitals and pharmacies). If you want to
go to any doctor, hospital or pharmacy, at any time,
an HMO is probably not for you.
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Most HMOs require you to choose a Primary Care
Physician (PCP) to manage all your health care
needs. In such situations, you must always contact
your PCP first. If your PCP decides you need
services from a specialist, he or she will refer you
to another provider in the HMO network. If the HMO
network doesn't include a specialist qualified to
treat your condition, your PCP will give you a
referral to a provider outside the network.
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Female enrollees may also choose a Woman's
Principal Health Care Provider (WPHCP) in
addition to their PCP. The WPHCP is an obstetrician,
gynecologist or a physician specializing in family
practice who is in the HMO's network. You can visit
your WPHCP without a referral from your PCP, but
your HMO can require that your PCP and your WPHCP
have a referral arrangement with each other.
What is an Evidence of Coverage?
HMOs issue an "evidence of coverage" that
explains the services, benefits, exclusions and
limitations of your coverage. HMOs must provide "basic
health care services" such as hospitalization,
preventive medicine, office visits, maternity care,
diagnostic services and treatments for emergency medical
situations, mental health care and substance abuse. It
is very important to read and understand your
evidence of coverage before you seek care. Here are some
of the items included in an evidence of coverage:
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Emergency Room Care - Explains guidelines you
must follow in emergency situations, both inside and
outside the HMO service area. If you don't follow
those guidelines, you may have to pay the cost of
emergency care.
To qualify as a medical emergency, there must be
acute symptoms of sufficient severity that you, as a
prudent layperson with average knowledge, could
reasonably expect that:
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your health is in serious jeopardy;
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you have serious impairment to bodily function;
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you have serious dysfunction of any bodily organ
or part.
In emergency situations, use the nearest hospital
emergency room. Emergency services may be received
from a plan or non-plan provider, including the
physician and hospital, without prior authorization
from your PCP.
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Urgent Care - Some HMOs cover urgent care
services for members who travel outside the service
area. If you travel a lot, choose an HMO that
provides this coverage.
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Care Received Outside the HMO Service Area -
If you are outside the HMO service area and need
medical care that is not urgent in nature, you must
call your PCP first.
What are Some Advantages to Joining an HMO?
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Less paperwork - There are no claim forms
to complete.
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Fewer expenses - Your only expenses are
your monthly premiums and copayments at the time
of service. An HMO copayment is often a fixed
dollar amount you pay each time you see a
physician or buy a prescription. HMO copayments
usually cost less than traditional health
insurance deductibles and copayments.
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Broader coverages - HMOs cover a broad
range of services including preventive health
services, maternity and, well-baby care. The HMO
cannot exclude preexisting conditions but you
may be charged a higher copayment for those
conditions. In addition, there are no lifetime
maximum dollar limits on your coverage, although
there may be other limits on your coverage. Many
HMOs also provide supplemental services, such as
vision care, prescription drugs, and durable
medical equipment.
What are Some Disadvantages to Joining an HMO?
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Limited choice - In an HMO you are not
free to choose any doctor, hospital or pharmacy
you want. You must use the HMO network
providers. HMO contracts with providers end
throughout the year. If your doctor leaves the
HMO, you will have to choose a new doctor.
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Affiliation period - HMOs may impose an
"affiliation period." During this time, you have
no benefits, but you also don't have to pay
premiums. The maximum affiliation period is two
months (or three months for late enrollees).
What Should I Look for in Choosing an HMO?
Most people choose an HMO as an option from an employer
group, plan or association to which they belong.
However, a few HMOs in Illinois sell directly to
individuals. When choosing an HMO, you should look at:
The HMO Itself
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Contact the Division of Insurance to find out if the
HMO is licensed in Illinois.
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Contact the Division of Insurance to check the HMO's
consumer complaint record.
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Ask your friends or family if they belong to the
HMO, and whether they are happy with the services
and care provided to them.
The HMO Plan
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Is it affordable? How do the premiums and copayments
compare to other HMOs offering similar benefits?
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Do the benefits match your needs? Are any services
you need not covered?
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How does the plan treat preexisting medical
conditions? (For example, even though an HMO can't
exclude a preexisting condition, it can require a
higher copayment.)
The HMO Health Providers
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Are the HMO providers familiar to you? Are they
conveniently located? Is there a wide choice of
physicians, specialists and hospitals?
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Are the HMO providers accepting new patients?
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Is your current doctor or specialist with the HMO?
If so, is he or she satisfied with the HMO and
planning to continue with the HMO?
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Is it easy to change Primary Care Physicians?
How Do I Add My Newborn Baby to My Coverage?
Your newborn is covered on your HMO plan from the moment
of birth. Your HMO must cover all conditions, including
illness, injury, congenital defects, birth
abnormalities, and premature birth. Your HMO may require
you to notify it of the birth and pay a premium to have
coverage for your newborn. The HMO must provide coverage
as long as you add the newborn within 31 days after the
date of birth and pay the premium.
Can My HMO Require Me to Leave the Hospital
within 24 Hours of Delivering My Newborn?
No. Illinois law requires all HMOs to pay for:
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at least 48 hours of inpatient hospital care for mom
and baby after normal delivery;
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at least 96 hours of inpatient hospital care for mom
and baby after cesarean section delivery.
Your doctor is the only person who can decide to
discharge you earlier. In that case, the HMO must then
pay for:
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a home nurse visit for mom and baby within 48 hours
after discharge; or
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a doctor's visit to check the baby within 48 hours
after discharge.
What Happens if I am Sick or Hurt
after My Doctor's Office has Closed?
Whenever possible, you must call your PCP before you get
medical treatment. Your PCP is required to be available
24 hours a day, seven days a week to help you. If you do
not call your PCP first, you may be responsible for
paying your medical expenses, except in emergency
situations.
What if My HMO Coverage is Canceled?
If you lose your HMO coverage, you
may be eligible to continue coverage under the federal
COBRA continuation law, the state HMO continuation law,
or a conversion policy.
NOTE: If you elect the conversion policy, you will lose
your federal eligibility for coverage under the Illinois
Comprehensive Health Insurance Plan (ICHIP). For further
information on this right, see our fact sheet entitled,
Facts About HIPAA - Preexisting
Conditions.
Continuation rights are not
available if the group contract is canceled and all
members lose coverage, such as when an employer files
for bankruptcy or discontinues offering health insurance
benefits. Read your evidence of coverage to learn how
and when you may continue your coverage under these
laws.
What if I Have a Problem with My HMO?
If you have questions about your HMO coverage, call the
Customer Service number listed in your evidence of
coverage. If you have a problem with a claim or
treatment, your evidence of coverage explains how to
appeal the decision to your HMO.
If your problem cannot be satisfactorily resolved by
your HMO, contact the Office of Consumer Health
Insurance (OCHI) within the Division of Insurance
Consumer Services Section
The Managed Care Patients Rights Act
The Managed Care Reform and Patient Rights Act,
effective January 1, 2000, requires HMOs to provide
more open access to information and services to you,
including:
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a description of the HMO service area;
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an explanation of exclusions and limitations;
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an explanation of pre-certification and
utilization review requirements;
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an explanation of emergency coverage and
requirements that must be met in order to
receive reimbursement for emergency services;
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a description of the process for selecting a
primary care physician;
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a description of any limitations to access
specialty care;
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a description of benefits available for
out-of-area care or services;
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an explanation of out-of-pocket expenses;
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a description of the provisions to ensure
continuity of care;
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an explanation of the appeals process.
This law required many changes
to the way HMOs conduct business in Illinois. This
list is only a summary of the law. For further
details or questions about the Managed Care Reform
and Patient Rights Act, see our brochure,
Office of Consumer Health
Insurance or
contact us at one of the numbers below.
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