How Health Maintenance Organizations Control Costs

GAO evaluated health maintenance organizations' (HMO's) attempts to reduce health care costs. GAO analyzed the results of a questionnaire sent to members and former members of 12 HMO's concerning their satisfaction with health services and compared the HMO premiums with those that a health insurance company would charge for the same benefits.

Information on the procedures and practices the 12 HMO's used to reduce health care costs should be useful to the Office of Health Maintenance Organizations in providing technical advice and assistance to HMO's. In general, the HMO's used various techniques intended to: (1) control hospital admissions and lengths of stay; (2) limit the use of hospital emergency rooms to cases requiring such care; (3) provide incentives to physicians to contain costs; and (4) foster efficient and effective management practices. Obviously, not all of the identified procedures and practices could or should be adopted by every HMO. However, GAO believes that each procedure or practice identified has some potential for reducing costs.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Robert A. Peterson Team: General Accounting Office: Human Resources Division Phone: (202) 275-6207