1.

Define
a. HMO- Health Maintenance Organization
A mode of health financing that is established mainly in the US to curb the medical
utilization among insurance companies. It has more control over the use of
healthcare benefits and therefore able to make utilization of health goods and
services cost more effective (POLICARPIO, 2006)

(DOH AO NO. 34, s. 2006)

b. Preferred Provider Organization
is a health care delivery system where providers contract with the PPO at various
reimbursement levels in return for patient steerage into their practices and/or
timely payment.

c. Point of Service
another type of managed care group health insurance with characteristics of both an

HMO and a PPO. There is more flexibility than in the HMO plans and less than in a
PPO.

2. Differentiate the following kinds of HMO:

a. Staff Model
b. Group model c. Network Model
d. Individual Practice Association -

References:
Department of Health Office of the Secretary. Administrative Order No. 34. (1994, July 20), Manila.
LePore, P. (2012, September 10). MANAGED CARE AND ITS VARIATIONS. Available:
http://www.acponline.org/residents_fellows/career_counseling/managed_care.htm
Point of Service Plans (POS Plans) (2012, September 10). Available: http://www.medhealthinsurance.com/posplan.htm
Policario, J.D. (2006) Economics in Health. Quezon City. C & E Publishing, Inc.
PPO Definition (2012, September 10). Available: http://www.aappo.org/index.cfm?pageid=11

MANAGED CARE AND ITS VARIATIONS

by Patricia LePore, JD [http://www.acponline.org/residents_fellows/career_counseling/managed_care.htm]
Managed Care Resource Center
Unlike a generation ago when most physicians worked in solo or small group practice, there are multiple options
available to physicians today. In addition to joining an existing solo practitioner or a group, you may have the
following options open to you depending on the market:
Staff-Model HMOs - Physicians are salaried employees of the HMO and are hired to care for the HMO's
patients/beneficiaries. In addition to salary, physicians may receive bonus and incentive payments based on
performance and productivity. In general, staff-model HMOs tend to employ generalists and physicians who practice
in many of the common subspecialties. Highly specialized physicians may be linked to the HMO through some type
of contractual arrangement. Physicians in this model care for a specific group of people usually referred to as a panel
of patients. Both the Harvard Community Health Plan and the Group Health Cooperative of Puget Sound are
examples of staff-model HMOs.
Physicians who practice in this type of setting often compare themselves to salaried employees. Indeed, one of the
major benefits of working in a staff-model HMO is that your salary is guaranteed and work hours are fairly regular. A
practice administrator handles the business aspects of the practice, leaving physicians free to do what they do best,
take care of patients.
Physicians also find staff-model HMOs convenient for patient care. Many provide services that individual-physician
offices could not afford to maintain, such as lab and radiology facilities and other types of diagnostic equipment.
And because the physicians are employees, staff-model HMOs can exert a greater degree of control over health care
delivery. Physicians may be required to follow practice guidelines and clinical protocols to manage and control
utilization of health services.
As a salaried employee, physicians in a staff-model HMO limit their income potential. Unlike a private practice where
physicians can increase their earnings by expanding hours or increasing patient load, physicians in staff-model
HMOs receive a salary in return for all clinical services they perform on behalf of patients. Raises and salary
increases must be negotiated.
Staff-model HMOs, once thought to be the medical practice arrangement of the future, have fallen out of favor. They
are very expensive to develop, require large investments in facilities and equipment, and often serve a limited patient
base.
Group-Model HMOs - Group-model HMOs may be classified as either "captive" or "independent." In the captive
model, the HMO forms the group, usually a large multi-specialty group, to provide services to HMO members. In the
independent model, the HMO contracts with an existing group to provide physician services to members. The Kaiser
Foundation Health Plan is an example of a captive group. The Geisinger Clinic is an example of an independent
group practice.
Both models, either captive or independent, are referred to as closed-panel HMOs because physicians must be
members of the group practice to participate in the HMO.

Group models of either type share some of the advantages of staff-model HMOs. Conducting utilization reviews,
implementing clinical guidelines, and standardizing processes of care is facilitated in this model.
For the physician working in this type of setting, the benefits are also similar to those found in a staff-model HMO.
Hours tend to be more regular and physicians are salaried. Physicians are more like employees in this model also, as
opposed to independent contractors. The group exerts a certain amount of control over the way physicians practice
through utilization mechanisms, productivity requirements, and the like.
Network-Model HMOs - In this model, an HMO contracts with several groups of physicians to provide services to the
HMO's members. The HMO may contract with several large multi-specialty groups or with many groups of primary
care practitioners. Physicians maintain their own offices and are often compensated through a payment method know
as capitation. For a pre-defined amount per member per month (PMPM), the group agrees to provide all needed
services for a specific population of patients. Physicians in this type of arrangement are often said to be assuming
"risk" because they are at risk for the cost of the care of the patients in the network. In this type of arrangement,
physicians may see patients that are non-HMO members.
Physicians in network-model HMOs maintain a fair amount of autonomy in that they continue to practice in their own
offices, see non-HMO as well as HMO patients, and generally set the parameters for their work setting.
One of the ways in which the HMO is able to control costs and improve quality is through the development and use of
practice guidelines, utilization review programs, and quality-assurance programs. Physicians participating in these
arrangements must accept a certain amount of oversight related to the way they practice medicine.
Independent-Practice Association (IPA) - This is one of the most loosely organized managed care entities. In this
model, physicians form an intermediary organization that contracts with payers, including HMOs, to provide services
in return for a negotiated rate. Physicians work from their own offices and are not limited in terms of the patients they
may see. In this model, reimbursement may involve capitation or discounted fee for service.
This model helps physicians achieve some of the benefits of belonging to a large group for negotiating purposes
while allowing physicians to maintain a great deal of autonomy in their individual practices.
There are benefits (and detriments) to practicing in any of these settings. If personal and professional autonomy are
high on your list of requirements for professional satisfaction, you might be happier in your own office and joining an
independent practice association. If freedom from business issues and structured office time is more to your liking, a
staff-model HMO might suit you best.

PPO Definition
http://www.aappo.org/index.cfm?pageid=11
A Preferred Provider Organization (PPO) is a health care delivery system where providers contract with the
PPO at various reimbursement levels in return for patient steerage into their practices and/or timely payment.
PPOs differ from other health care delivery systems in the way they are financed, including providing more
choice, benefit flexibility and enrollee access to providers and medical services both in and out-of-network.
There are two types of PPOs:

A non-risk PPO's primary focus is to contract with providers in a geographical area to form an
interconnected network of providers and services. The non-risk PPO network leases and/or "rents" its
network for a fee to insurance companies, self-insured employers, union trusts, third-party
administrators (TPAs), business coalitions and associations.

A risk PPO assumes the financial risk for an enrollees medical costs. Traditionally, insurance
companies offer a risk PPO that includes a benefit plan and network services either provided by the
risk PPO or leased from a non-risk PPO.

Point of Service Plans (POS Plans)

http://www.medhealthinsurance.com/posplan.htm
A POS or Point of Service plan is another type of managed care group health insurance with characteristics of both
an HMO and a PPO. There is more flexibility than in the HMO plans and less than in a PPO.
What is a POS Plan?
In a POS plan, you select a primary care physician from a list of participating providers, like in an HMO. All your
medical care is directed by this physician, so he is your point of service. This doctor will normally refer you to other
in-network physicians if you have a need for a specialist. There is a broad base of medical providers in the network
which typically covers a wide geographic area.