Managed Care Organizations

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The HMO is a type of managed care organization (MCO) whose health care coverage is provided by making contracts with doctors, hospitals, and other health care providers. Those doctors or hospitals which do not have contract with the HMO do not come under its coverage for health care.


The group is paid a fixed fee per month.
Independent practice association model HMO - This is similar to group model. The HMO enters into contract with a group of individual health care providers (through a legal entity - practice association). The difference is that the independent practice association (IPA) can treat patients other than the HMO enrolled patients as well.
Network model HMO - It is a combination of all of the above. The HMO can have multiple contracts; it can hire some doctors and pay them salary, it can have IPA contracts with other doctors, and can have exclusive contracts with groups.
Point of service model HMO - In point of service (POS) model, the patients enrolled in the HMO can consult with doctors who are not outside the network of HMO, without needing a referral from a doctor of HMO network. This provides the patients the flexibility consult any doctor of their choice although they have to pay more to consult with doctors outside the HMO network.
A PPO is a form of MCO which makes arrangements with health care providers to seek reimbursement at lower rates. Thus, the patients pay lower than regular fees when they consult the health care providers (preferred providers) who are part of the PPO network.
The managed care organizations generally reduce cost by improving efficiencies. ...
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