Last week we talked about understanding the concept of HMO and why sometimes a covered person may be declined treatment by the hospitals due to plan limitations. The part one of this article is available https://beinsurednaija.com/the-concept-of-hmo-and-health-insurance-part-1/ This week we will be talking about the business reasons why HMO subscribers are sometimes declined treatment and also look at health insurance.

Before moving to health insurance, it is very important to understand the business dynamics of why some hospitals may not attend to HMO subscribers. HMO companies enrol a lot of hospitals in different locations to give their subscribers the benefits of accessibility and proximity to where they live or work. This directly means that all hospitals with varying standards and sizes will be in the network. These hospitals due to their locations, facilities available, services provided, class of patients targeted with the applicable overheads will charge differently for the treatment of the same illness. It is natural for a hospital in Victoria Island to charge more than another hospital in a remote location on the mainland for the treatment of the same illness. Based on relationship, HMOs are to settle their bills with the hospitals at the end of the month. Sometimes, HMOs rate some hospitals more highly than others due to their strategic importance but this is purely a class thing. In a situation where the HMO fails to settle bills as agreed, then subscribers using such hospitals will not be attended to while their colleagues using some other hospitals under the same HMO will be attended to. In fact there are instances where a subscriber will be declined treatment by a hospital but will be treated by another hospitals within the network.

On the other hand, health insurance is a product of general insurance companies who offer various health products to cover for their customers. In a broad sense, health insurance and HMO offer similar benefits, perhaps to different existent. One major difference between the two arrangements is that policyholders under health insurance are free to choose their insurer and the extent of cover they want. Premium payable is dependent on age, sum insured, lifestyle, existence of pre-existing conditions, among others. Coverage is based on the number of beneficiaries specified by the insured person. This invariably means that the potential insured person can cover himself and choose whom he wants covered (spouse, children, etc) and how many people. This also means that a small family of maybe three people will pay less than a family of four people even if they choose the same sum insured. Sometimes each person covered may have his own separate sum insured which is the limit and it is also possible to have a joint sum insured that jointly cover everyone.

Insurance companies on the other hand do not mind selling directly to individuals unlike the HMO arrangement that target corporate organizations. Premium under health insurance is slightly higher than what organizations pay under HMO, but the scope of cover is also much higher. Health insurance is designed to cater for inpatients (admitted patients) only however some medical procedures that do not require hospitalization can be covered even if the patients will not be hospitalized. Other benefits of a typical health insurance includes ambulance services, hospital cash, overseas medical treatment (if necessary) and many more. This does not indicate that treatment is unlimited because each benefits available under the policy is subject to different limits and they are expressed as a certain percentage of the insured. Each treatment is also adjusted against the sum insured.

Health insurance also works on the basis of networked hospitals who have agreement with the insurance companies. Subscribers do not need to pay cash for treatment. However, sometimes where there is no network hospitals available, the insured person can go to any licensed hospital for treatment. In this case, he needs to pay the bills first and send the bills to the insurers. Due to the volume and for the ease of management, a country like India has Third Party Administrators (TPA) who are experienced medical and insurance professionals who will vet and adjust the bills in line with the policy conditions and present it to the insurance companies for payment. TPAs are trusted to handle this part, so when they present the bills to the insurance companies, reimbursement will follow shortly. In case of any clarifications, they contact the hospitals directly on behalf of the insurance companies. Health Insurance holders will also have a registration card like HMO subscribers but unlike HMO, holders are unlikely to be declined treatment because covered illnesses are already specified and limit for each has been defined. .

In the next and final part of this series we will look at the possibilities of having the two types of covers.

…to be continued

Remember, Premium is the token paid to buy certainty when uncertainties happen. – Be Insured Naija

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Ok

interesting read

Nice one