It depends. HMOs were designed to hold down the cost of health care, and so they tend to charge lower premiums than traditional insurers. Some HMOs can provide excellent care. But there are also many examples where HMOs have not provided the care that their members required.
One key difference between HMOs and traditional insurance is the direction in which the incentive structure points. In the simplest terms, insurance tends to create incentives for providers to provide treatment, because payments are based on the service rendered to the patient — the more services rendered, the higher the bill and the higher the payment. The downside of this incentive structure is that patients may be overtreated, which causes costs to rise and which can harm the patient.
By contrast, the incentive structure for HMOs creates incentives to withhold care. The medical group or doctor working with an HMO is paid a fixed amount each month, whether or not care is provided. Therefore the most profitable situation for the HMO is when no care is provided. When a member requires care, the group must use some of the money it has already been paid to provide that care. In many cases, the HMO structure forces the doctor to decide what care to provide to the patient when the doctor or the doctor’s group will have to pay for the care.
Another difficulty that HMO members may experience is that the providers with whom the HMO has entered into contracts may not be the most qualified providers. But part of the HMO “bargain” is that, with some exceptions, the HMO member must receive care from the providers that the HMO has contracted with. This lack of choice can mean that the patient is asked to accept whatever level of care is provided by the HMO, even if far better care is available out of network from doctors or facilities who specialize in treating the member’s condition, or who use new techniques or equipment that produce demonstrably better outcomes.
While much of our practice involves work we do for other lawyers, we also handle cases for people and businesses involved in disputes with their insurance companies. If you, your business, or a member of your family is involved in an insurance-related dispute, we might be able to help.
Our analysis of insurance issues is so well respected that we are sometimes consulted by insurance companies themselves. We were recently asked by a major insurer to advise it on whether to make a $17 million claim to its own insurance company.
We do not handle litigation on a high-volume, assembly-line basis, and we are therefore very selective about the cases we take. But when we do take a case, we devote considerable thought, care, and attention to it, so that it moves as quickly through the courts as the judicial system permits.
To find out more about what we can do for you read “Our Litigation Practice for Policyholders.”
Southern California civil appeals attorney, Jeffrey I. Ehrlich, is an appellate specialist certified by the State Bar of California’s Committee on Legal Specialization.