HMO Insurance: Definition and Functions

HMO in Nigeria
HMO Insurance in Nigeria
August 24, 2016

HMO Insurance: Definition and Functions

To be covered by a top health insurance plan should be a priority for every individual due to the current

situations around the world. One can never be sure what catastrophe or unfortunate situations might

present themselves at any point in time.

Top health insurance is one of the most popular kinds of insurance policies that cover an individual’s

risk of incurring medical expenses. One could easily find a number of insurance companies offering

several types of health insurance policies that tend to cover one or more of medical situations.

The numerous benefits offered to policyholders under these insurance plans include reimbursement of

prescriptions and medical equipment, doctor visits and preventive care.

The benefits offered in a health insurance policy often differ as per the premium of the policy, coverage

amount, age and income of the individual planning to take up insurance cover, hence the need for an


An HMO is health maintenance organization. A basic HMO definition can be described as a company to

whom an individual pays a fixed monthly payment in return for a wide range of medical benefits.

The organization includes a network of physicians and doctors. From the selected network, patients can

then select a primary care physician also known as a PCP. In some emergency situations, HMO insurance

plans allow patients to select from a wider pool of physicians.

Functions of HMO

An HMO is given the responsibility of numerous functions that have to be conducted according to the

guidelines set by the National Health Insurance Scheme (NHIS). Below are listed some of the functions of

and HMO in general.

  • Collection of donations from voluntary contributors.
  • Compilation of contributions from certified employers and employees registered under the private

    health insurance.

  • Assure that the processing of claims is carried out effectively and in a timely manner.
  • Ensure the timely payment of duty to primary health care facilities and fee-for- service to secondary


  • Clarification of the monthly scheme returns on duty and fee-for service payment within 30 days of the

    following month.

  • Collection and submission of encounter data forms from health care facilities to NHIS.
  • Contracting with only health care facilities accredited by the scheme for the purpose of rendering health care services.
  • Making sure that contributions are kept in the Scheme’s accredited banks.
  • Establishing and ensuring a quality assurance system for the provision of quality health care. Quality

    assurance monitoring of health care facilities by HMOs is done quarterly and the reports sent to NHIS

    within one month.

  • Ensure timely approval of referrals and undertake necessary follow up to complete referrals.
  • Carry out continuous sensitization of enrollees.
  • Marketing in accordance with NHIS guidelines.
  • Marketing of health plans to employers/enrollees of different public and private sectors.
  • Collect appropriate contributions and make necessary payments to the appropriate pools in a timely


  • Comply with other provisions as spelt out in the operational guidelines.
  • Carrying out functions as contained in the NHIS operational guidelines.
To conclude, an HMO is considered a good option when selecting health packages. They provide

numerous benefits to the consumer.

It is a particularly good option for citizens in developing countries of the African and Asian regions.