How HMOs are making a comeback

HMO plans — or health management organizations — don't have the best reputation. But The New York Times outlines why they might be making a comeback.

In the 1990s, the plans began to decrease in popularity. Consumers were frustrated with the lack of provider choice available within the plans, in addition to the low-quality care the plans offered.

But now, things have changed. "We're starting to see a resurgence of interest," said Steve Hamman, a senior vice president at the Health Care Service Corporation.

The best evidence of this resurgence is on the Affordable Care Act exchanges. The McKinsey Center for U.S. Health System Reform found 43 percent of the mid-price plans on the exchanges are HMOs, while 13 percent are EPOs, or exclusive provider organizations.

HMOs in Illinois have seen a comeback within the past six months. Blue Cross and Blue Shield of Illinois partnered with Chicago-based Advocate Health Care last October to offer a new HMO called BlueCare Direct, which is offered on the exchanges and has drawn in 60,000 customers. Still, BCBS of Illinois has offered employee HMO plans for years, but enrollment has remained around 700,000 out of the 4.6 million who enrolled for employee-sponsored coverage.

On top of that, consumers and employers are not completely satisfied. "A lot of employers don't feel comfortable limiting their employees' options," said Paula Wade, an analyst at Decision Resources Group. "They're going to be very reluctant to put them in a network that seems to be too limited or limited in the wrong ways."

To mitigate that wariness, insurers are taking action. Instead of calling HMOs by their true name, insurers are attempting to revamp their title.

"We call it a high-performing network," Advocate CMO Lee Sacks, MD, said of the BlueCare Direct plan. "It was a term we stole from a consultant a year ago to kind of get away from the negative connotations of narrow network."

But state regulators aren't having it. In some states, they're not allowing organizations to rename their HMO plans. Mr. Hamman said some groups were lobbying to call HMOs HIOs — or health improvement organizations — instead. "We're not trying to trick anybody," Mr. Hamman said, according to the report. "We're just conscious of the historic bad name that HMO has had. We firmly believe that it is very different today."

The pros and cons of HMO plans are undeniable: Though they offer less expensive coverage, they severely limit consumers' provider options. For now, the future of HMOs remains to be seen.

More articles on payer issues:
BCBS of NC financially breaks even for 2015
Are more ACA insurance co-ops slated for closure?
BCBS of Michigan has highest earnings decline among nation's BCBS plans

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