Group HMO plans for employers

For an employer, a group HMO is a way the medical plan organizes access to care. It can be quoted as a fully insured small-group or large-group policy, and some self-funded or level-funded plans also use an HMO network. The funding method and the network design are separate choices.

What it is

HealthCare.gov describes an HMO as a plan that usually limits coverage to care from doctors who work for or contract with the HMO, generally will not cover out-of-network care except in an emergency, and may require you to live or work in its service area. HMOs often provide integrated care and focus on prevention and wellness.

In employer coverage, employees usually choose or are assigned a primary care physician and use that physician as the starting point for routine care. Many HMOs use a referral to coordinate specialist visits. Emergency care is covered when it meets the plan's emergency standard, including when it is provided outside the service area.

A non-grandfathered small-group HMO must include essential health benefits and is issued at a metal tier. Preventive services required by the Affordable Care Act are covered in-network without cost sharing on non-grandfathered plans.

Who it fits

A group HMO is often a fit when most employees live and work inside the HMO's service area and are comfortable receiving care from the HMO's contracted doctors and hospitals. It can be a clean design for a workforce concentrated in one metro area, including many Tampa Bay employers.

A PPO or a POS plan can be a better match when people regularly see providers outside a single network, travel, or work in more than one state. We will look at home and work ZIP codes, and at the actual directory, before we recommend a design.

How it works for employers

You sponsor the plan and contribute toward the premium or plan cost in the amount you choose, subject to any issuer or state participation and contribution rules that apply. At enrollment, employees confirm that they live or work in the service area if the HMO requires it, select a primary care physician if the plan uses one, and use in-network providers for non-emergency care.

Because coverage is concentrated in the contracted network, it is worth checking — before you adopt the plan — that the hospitals, primary care doctors, and specialists your people already use appear in the directory. We will do that as part of the quote, the same way we would for a PPO or an EPO.

The same emergency rule in the No Surprises Act applies to group HMOs: emergency services must be covered without prior authorization even when the facility or provider is out of network, cost sharing cannot exceed the in-network amount, and the enrollee cannot be balance-billed for the rest of those emergency services. That sits alongside the HMO's usual rule that routine, non-emergency care is provided inside the service area by contracted doctors.

We will also check the service area against home and work locations on the roster, so we do not recommend an HMO whose area does not actually cover the people on the census.

An HMO can also be built as an HSA-qualified HDHP when the deductible and out-of-pocket limits meet the IRS rules in Internal Revenue Code § 223.

How it compares

Each network design is a legitimate fit for some groups.

• An HMO concentrates coverage on the HMO's contracted doctors, often with a primary care physician and referrals, and generally covers out-of-network care in an emergency.
• A PPO pays a higher share in network and also pays toward out-of-network care, usually without a referral.
• An EPO generally covers in-network care except in an emergency, and typically does not use an HMO-style referral. A POS plan generally costs less in-network and requires a referral for specialists.

The comparison is about access and service area, not about which design costs less. We will not describe an HMO as cheaper in the abstract.