Health Maintenance Organization (HMO)

What is an HMO?

An HMO, or health maintenance organization, is an insurance plan offering coverage through a physician network. When an individual has an HMO, they typically pay a monthly or yearly fee to receive access to health insurance coverage. In selecting care, the individual must choose a healthcare provider under the HMO’s contract. 

What’s the difference between HMOs and PPOs? 

A similar plan to an HMO is a preferred provider plan (PPO). PPOs tend to have higher premiums, deductibles and copays compared to HMOs.  

HMOs require individuals to have a primary care physician (PCP) and referrals to specialists, but PPOs do not.  

In addition, PPO plans generally cover out-of-network providers, often at higher rates than in-network, whereas HMOs usually do not. 

Why are HMOs important to healthcare?

HMOs are important to healthcare because they cover essential medical care for beneficiaries and their families. HMOs tend to be a popular option, as they decrease premium costs for members and generally have low or zero deductibles.  

Notably, HMOs have some limitations, including that they place restrictions on members. One restriction is the control over providers, and another restriction is that members must see an assigned primary care physician before receiving other services.