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HMOs

An HMO delivers all health services through a network of healthcare providers and facilities. With an HMO, you may have:

  • The least freedom to choose your health care providers.
  • The least amount of paperwork compared to other plans.
  • A primary care doctor to manage your care and refer you to specialists when you need one so the care is covered by the health plan. Most HMOs will require a referral before you can see a specialist.

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Health Maintenance Organization (HMO) is a medical insurance group that provides health services for a fixed annual fee. It is an organization that provides or arranges managed care for health insurance, self-funded health care benefit plans, individuals, and other entities in the United States and acts as a liaison with health care providers (hospitals, doctors, etc.) on a prepaid basis. The Health Maintenance Organization Act of 1973 required employers with 25 or more employees to offer federally certified HMO options if the employer offers traditional healthcare options.

Unlike traditional indemnity insurance, an HMO covers care rendered by those doctors and other professionals who have agreed by contract to treat patients in accordance with the HMO’s guidelines and restrictions in exchange for a steady stream of customers. HMOs cover emergency care regardless of the health care provider’s contracted status. HMOs often require members to select a primary care physician (PCP), a doctor who acts as a “gatekeeper” to direct access to medical services but this is not always the case. PCPs are usually internists, pediatricians, family doctors, or general practitioners (GPs).

Except in medical emergency situations, patients need a referral from the PCP in order to see a specialist or other doctor, and the gatekeeper cannot authorize that referral unless the HMO guidelines deem it necessary. Some HMOs pay gatekeepers by fee for service and capitate specialists, while others reverse the arrangement. “Open access” and “POS” (point of service) products are a combination of an HMO and traditional indemnity plan. The member(s) are not required to use a gatekeeper or obtain a referral before seeing a specialist. In that case, the traditional benefits are applicable. If the member uses a gatekeeper, the HMO benefits are applied.