A Health Maintenance Organization (HMO) provides and/or arranges for the delivery of comprehensive health care services and supplies to its members in a designated geographic service area in exchange for prepaid premiums. HMOs combine the financing and delivery of comprehensive healthcare services and supplies. An HMO arranges with health care providers to furnish services and supplies to its members; sets standards for selecting providers; and establishes formal programs that encompass preventive medicine, quality assurance and utilization management.

Members typically select a Primary Care Provider (PCP) who provides for all the member’s primary medical care. In most plans the PCP is a physician who is responsible for referrals and access to specialists and other services. (This is called the gatekeeper function.) However, in many plans a referral is not necessary to obtain routine ob/gyn services for a female member; and some plans have open access features in which members may obtain a wide range of specialist services within the HMO network without the necessity of a referral. Typically the member’s financial responsibility for covered in-network services has consisted of a fixed copayment depending on the type of service for each visit.

In recent years, HMOs have offered Point Of Service (POS) benefit plans. A POS plan allows a member to obtain healthcare services from network providers, or receive reimbursement, subject to the terms of the contract, from the HMO for medically necessary healthcare services obtained from providers outside the HMO network. The member’s financial responsibility for covered out-ofnetwork services resembles that of an indemnity health insurance plan, with a deductible and coinsurance structure that generally results in a higher payment by the member than if he or she obtained services or supplies from a network provider. In addition, the member who uses an out-ofnetwork provider may also be responsible for any balance of the bill that exceeds the usual, reasonable and customary (UCR) charge as determined by the HMO. The HMO would pay the UCR amount less any deductible or coinsurance paid by the member.

More recently, in some plans the member’s financial responsibility for covered in-network services may also include deductibles and/or coinsurances.

In 1991 the New Jersey Legislature enacted N.J.S.A. 30:4D-76, “Managed Care Plan for Medicaid Recipients.” New Jersey HMOs were solicited by the Department of Human Services (DHS) to provide enrollment opportunities for Medicaid recipients. Following the approval of the federal Center for Medicare and Medicaid Services (CMS, formerly the Health Care Financing Administration (HCFA)) on 06/07/1995, recipients of Aid for Families with Dependent Children (AFDC) were required to select an HMO for the provision of their health care services and supplies. NJ KidCare and NJ FamilyCare are new initiatives providing free or subsidized HMO Medicaid-level coverage for children and adults in low income families who would not ordinarily be eligible for Medicaid coverage because they exceed the family income limit.

Some New Jersey Medicare recipients are enrolled in HMOs through Medicare Advantage contracts. In these arrangements, the HMO receives a capitation payment from CMS and an additional premium from the recipient, who may receive certain benefits above those of regular Medicare, but must use the HMO’s network of facilities and providers. The Medicare recipient must still pay the Part B premium for Medicare coverage.

Aetna Health, Inc.
980 Jolly Road, P.O. Box 1109
Blue Bell, PA 19422
Telephone: 1-800-323-9930
Web site: www.aetnaushc.com

CIGNA HealthCare of New Jersey, Inc.
499 Washington Boulevard
Jersey City, NJ 07310
Telephone: 1-800-345-9458
Web site: www.cigna.com