What is a health maintenance organization (HMO)?

If you hear the term HMO mentioned, it’s referring to a health maintenance organization. A HMO is basically a type of health care insurance organization which provides health insurance for patients via a specific group of physicians and medical facilities. These doctors, clinics, and hospitals etc will belong to the insurer’s network of heath care providers and they have a contract with insurance carrier. To receive benefits you must visit a health care provider from the network.

Most of these HMO plans will ask members to select a PCP (primary care physician) who they see for their routine doctor visits and preventative care. After a doctor is chosen, patients visit him or her whenever they have a medical problem, barring an emergency.

The PCP diagnoses patients and will refer them to a specialist or another physician if needed. If you visit a health care provider without being referred by the PCP, it won’t be covered by the health plan, even of the physician belongs to the network.

There are a few types of HMO plans. The group plan means the insurer contracts physicians in a certain geographical area and they treat patients who live in it. The health insurance companies receive a monthly fee for each HMO patient they treat, but they also treat patients who don’t belong to the HMO. A captive group HMO means the health care providers treat only HMO members.

Another method is called a staff model. In this type of HMO the health care providers offer treatment in a medical center which is managed and owned by the HMO.