HMO: Health Encyclopedia

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An HMO is a type of health insurance that was meant to be fix for the rising costs of traditional indemnity, or “fee-for-service”, insurance. It utilizes primary care physicians (PCP) as “gatekeepers” in order to prevent overutilization of physician or specialty services. In order to see a specialist, patients must receive a referral from their PCP. Customers who enroll in this plan are required to choose health care providers within the network of contracted physicians and hospitals.

Patients enrolled in HMOs still pay monthly premiums, but their premiums tend to be lower because of the contracted network—providers know that patients will be directed to them. Furthermore, HMO patients typically have lower copays.

HMOs are ideal for individuals who visit the doctor infrequently and who seek health services at an overall less cost. If a patient sees a provider outside of the HMO network, they are responsible for the full cost of treatment. Aside from having to choose providers in the network there are few other limitations; in the case of emergency care, patients do not have to stay within the network.

Looking for a comparison of the various plan types? Check here for a side-by-side comparison.
 
 
 

Insurance coverage photo courtesy of Shutterstock.

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