Essentials of Health Care Finance - Research Proposal Example

?Which offers more benefits to the consumer Health Maintenance Organizations (HMOs) or Preferred Provider Organizations (PPOs)? I. The Problem and setting A. The statement of the problem and sub problem: Health insurance assumes immense importance in today’s life as the medical expenses are shooting up and unexpected contingencies affecting the health of individuals are most likely to occur in daily life. It is generally found that most of the individuals prefer to safeguard themselves and their families from the drastic outcomes of such unforeseen events by way of health insurance and majority of the employers offer health insurance schemes to their employees. There are many institutions such as Health Maintenance Organisations, Preferred Provider Organisations, Medical service organisations and Physician Hospital Organisations which belong to the healthcare industry and provides assistance to those who have insurance coverage. This paper is an attempt to answer the following questions. Are HMOs superior to PPOs? And is it beneficial to choose HMOS? B. The Hypotheses: The hypotheses of the study is that while both HMOs and PPOs are beneficial it is the HMOs (Health Maintenance Organizations) that offer more benefits to the customers than that of the PPOs (Preferred Provider Organizations). C. The delimitations: The limitations of the study include the lack of authentic quantitative studies on the issue and the shortage of primary resources as most of the previous studies have been qualitative attempts. D. The definitions of the study: HMOs are defined as “organisations that receive premium dollars from subscribers in exchange for a promise to provide all health care required by that subscriber for a defined period” (Cleverley, Cleverley & Song, 2010, p.158) while the formation of PPOs refer to “a third party – a union, an insurance company or a self insured business - makes a contract with a group of physicians and hospitals to treat members at a discount” ((Hales, 2008, p. 339). E. The assumptions: The basic assumption for this study is that both the HMOs and PPOs are helpful to the subscribers in reducing the out-of-pocket medical expenses. While the PPOs benefit patients with severe health related issues it is assumed that HMOs are proved to be beneficial for most of the people who do not possess serious illness and are relatively healthy. F. The Importance of the study: It is obvious that the HMOs and PPOs are helpful to the subscribers in reducing the out-of-pocket medical expenses. PPOs are beneficial for those who possess severe health related issues which necessitates expert’s attention and care even if the premiums are comparatively high. It is also true that the freedom offered by the PPO plans permits subscribers to consult specialists beyond their network and therefore it is beneficial for those who have a personal relationship with a doctor who is not a part of the network. On the other hand HMOs are proved to be beneficial for most of the people do not possess serious illness issues in reducing the possibility of serious diseases. The cost benefits are very high in HMOs and are most suited for youngsters who are relatively healthy and those who have a family doctor and they do not charge any additional amounts for the consultation outside their network. Therefore, it is imperative to find out whether it is the HMOs or the PPOs that offer most benefits to the customers. II. The review of Related Literature There have been a number of literature that pinpoint the advantages and disadvantages of HMOs. The emergence of innovative forms of health insurance which include HMOs and PPOs ensuring the effective management of cost and care, during the eighties have pushed back the traditional insurance. It has been observed that the HMOs support their subscribers by providing medical aid at reduced rates and collect advance payments from them as they offer packages which are combinations of costs and benefits (Cleverley, Cleverley & Song, 2010, p.158). According to many researchers the “HMOs combine the insurer with the doctors and the hospitals to eliminate the moral hazard incentive to overuse medical care that is inherent in traditional third-party-insurance” (Tremblay & Tremblay, 2007, p. 162). An HMO plan considerably reduces the cost of consulting a doctor as the possess networks of doctors and hospitals and offer insurance coverage more than 80% of the total hospital bill in certain plans (Tremblay & Tremblay, 2007, p. 162). Studies have shown that the subscribers of HMOs are having different choices as these organisations provide a number of plans which differ in the premium as well as the coverage which enable them to choose plans according to their requirements. The earlier detection and treatment ensured by the HMO packages reduces the chance of serious illness. However HMOs restrict the freedom of the subscriber to choose the physician and he is compelled to make his choice out of a pre-approved list of doctors and it requires the recommendation from an approved physician or sometimes from the management itself to consult a doctor who is out of the network (McGladrey, 2006, pp. 5-19). On the other hand, there have been many studies on the advantages and disadvantages of PPOs as well. The providers associated with the PPOs fix their discounts and insurance companies provide incentives for clients. The subscribers are permitted to make their choice out of the provider’s network and in certain cases to cross the network by paying extra for the privilege and such plans are termed as Point of service plans (Hales, 2008, p. 339). As per Christine Robinson-Crowley’s view “The PPO offers a brokered network of physicians, hospitals and other providers of health services to employed populations in an attempt to lower costs and increase efficiency” (Robinson-Crowley, 1998, pp. 227-228). The only difference found between a PPO and the IPA is the absence of risk to the provider in the case of the former. Even if the service is chargeable, incentives together with discounts are offered to make PPO plans more attractive. Even though PPOs are incorporated with insurance carriers, it permits the direct use by self insured employers and it is also to be noted that there is every possibility for the employer cost to increase due to the fact that the medical services provided by PPO plans are chargeable. PPOs provide quality health care together with improved benefit packages even though these plans are more difficult to explain and offer no incentives for cost control. It is also true that the PPO plans are much more expensive than the HMO plans and does not provide full coverage for medical services received outside the prescribed net work. The limited supportive data availability is yet another reason to doubt the effectiveness of PPOs (Robinson-Crowley, 1998, pp. 227-228). All the above pieces of literature discussed above will be useful for the present study. VI. References Cleverley, W.O., Cleverley, J.O & Song, P.H. (2010). Essentials of Health Care Finance. 7th revised edn: Jones & Bartlett Learning. Hales, D. (2008). An Invitation to Health, Brief. 6th revised edn: Cengage Learning. McGladrey, I.R. (2006). Mandated Benefits 2007 Compliance Guide. Illustrated edn: Aspen Publishers Online. Robinson-Crowley, C. (1998). Understanding Patient Financial Services. Illustrated edn: Jones & Bartlett Learning. Tremblay, V.J & Tremblay, C.H. (2007). Industry and Firm Studies. 4th Illustrated edn: M.E. Sharpe. Read More