Health Maintenance Organization (HMO)
What Is a Health Maintenance Organization (HMO)?
A health maintenance organization (HMO) is a type of health insurance plan that provides medical services through a network of doctors, hospitals, and healthcare providers. Members typically must use providers within the network to receive coverage.
HMOs focus on coordinated care and preventive services.
Why It Matters
HMOs can help reduce healthcare costs by negotiating rates with network providers and emphasizing preventive care. These plans often have lower premiums and predictable out-of-pocket costs compared to other types of health plans.
However, they may limit provider choices.
How a Health Maintenance Organization Works
Members choose a primary care physician (PCP) who manages their healthcare.
The PCP typically:
- provides routine care
- coordinates treatment
- refers patients to specialists when needed
Coverage generally applies only when using providers within the plan’s network.
Example
A patient enrolled in an HMO may visit their assigned primary care physician before receiving a referral to see a specialist.
HMO vs Preferred Provider Organization (PPO)
- HMO plans require members to use network providers and referrals.
- PPO plans offer more flexibility in choosing providers but may have higher costs.
FAQs About HMOs
Do HMOs require referrals to see specialists?
Yes. Many HMO plans require referrals from a primary care physician.
Are HMOs cheaper than other plans?
They often have lower premiums and out-of-pocket costs.
Can members see out-of-network doctors?
Coverage is usually limited to in-network providers.
Related Terms
