Medicare Advantage Plans: Health Maintenance Organizations (HMOs) - dummies

Medicare Advantage Plans: Health Maintenance Organizations (HMOs)

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You can choose among several very different types of plans within the Medicare Advantage system. Some types, such as HMOs and PPOs, have been part of Medicare for many years. Other types of MA plans are much newer.

Medicare Private Fee-for-Service plans surged for a time after 2004, and Medicare Medical Savings Accounts gained some traction too, but now both types of plan are available in relatively few areas. The following explains the key features of these and some other types of MA plans.

HMOs are the most popular Medicare Advantage plans, chosen by almost two-thirds (65 percent) of people in the MA program in 2013. They offer managed care, which typically requires primary care doctors to act as gatekeepers in referring patients to specialists and other services.

HMOs operate locally in limited geographical service areas — usually a county or even a zip code. The same HMO may offer costs and benefits different in one service area than in another right next to it. Here are the main features of HMOs:

  • Eligibility: You must have Part A and Part B and live within the service area of the plan you select. You can’t join a HMO if you have kidney failure (ESRD), but if you develop it while already enrolled, you can remain in the plan.

  • Choice of doctors and hospitals: You must be treated by doctors and hospitals within the plan’s network of contracted providers in its service area, except in an emergency or if you urgently need care.

    You usually need a referral from your primary care doctor to see a specialist. (If the plan offers a point of service option, however, you can go out of network for a higher co-pay.) A HMO can supply you with its list of providers to help you find out in advance whether it covers your preferred hospitals and doctors.

  • Extra benefits: Some plans offer routine vision, hearing, and/or dental services, though just how good this coverage is varies greatly among plans and some offer them as separate optional packages for an additional premium. Some plans offer other extras, like health club memberships.

  • Prescription drugs: Most HMOs include Part D drug coverage in their benefit packages, but not all do. If you join a plan that doesn’t, you can’t get drug coverage from a stand-alone Part D plan.