What should I remember about HMO (Health Maintenance Organization) for the exam?

Insurance

HMO (Health Maintenance Organization)

An HMO is a managed care health insurance plan that provides comprehensive coverage at the lowest cost, requiring members to select a primary care physician (PCP) who coordinates all care and provides referrals to specialists within the network.

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Exam Tip

HMO = lowest cost, requires PCP, requires referrals, in-network only. PPO = highest cost, most flexibility. EPO = hybrid (network-only like HMO, no referrals like PPO).

What is an HMO?

A Health Maintenance Organization (HMO) is a type of managed care plan that provides health insurance coverage through a network of doctors, hospitals, and other healthcare providers. HMOs focus on preventive care and cost containment by requiring members to use in-network providers and obtain referrals for specialist care.

Key Features of HMO Plans

Feature	Description
Primary Care Physician	Must select a PCP who manages all care
Referrals Required	Need PCP referral to see specialists
Network Restrictions	Must use in-network providers (except emergencies)
Lower Premiums	Generally the lowest-cost managed care option
Preventive Focus	Emphasizes wellness and prevention

How HMO Plans Work

Step	Description
1	Member selects a primary care physician (PCP)
2	PCP serves as "gatekeeper" for all medical services
3	PCP provides referral for specialist visits
4	Member must use network providers
5	Out-of-network care NOT covered (except emergencies)

HMO vs. PPO vs. EPO Comparison

Feature	HMO	PPO	EPO
PCP Required	Yes	No	No
Referrals Needed	Yes	No	No
Out-of-Network Coverage	Emergency only	Yes (higher cost)	Emergency only
Network Required	Yes	No (but cheaper in-network)	Yes
Premiums	Lowest	Highest	Medium
Out-of-Pocket Costs	Lowest	Highest	Medium
Flexibility	Lowest	Highest	Medium

PCP as Gatekeeper

Role	Description
Coordinator	Manages all aspects of member's healthcare
Referral Authority	Must authorize specialist visits
Medical Home	First point of contact for all health concerns
Record Keeper	Maintains comprehensive medical history

Advantages of HMO Plans

Advantage	Explanation
Lower premiums	Least expensive managed care option
Lower out-of-pocket	Predictable copays, minimal deductibles
Coordinated care	PCP oversees all treatment
Preventive coverage	Many wellness services at no cost
No claim forms	Paperwork handled by network

Disadvantages of HMO Plans

Disadvantage	Explanation
Limited choice	Must use network providers
Referral requirement	Extra step to see specialists
No out-of-network	Only emergencies covered outside network
PCP dependency	Must go through PCP for all care
Geographic limits	May have issues when traveling

Common HMO Exceptions (No Referral Needed)

Service	Reason
Emergency care	Always covered, any provider
OB/GYN visits	Women's health direct access
Routine preventive care	Wellness visits, screenings
Mental health	Many plans allow direct access

Who Should Choose an HMO?

Good Fit	Poor Fit
Budget-conscious individuals	Those wanting provider flexibility
Those comfortable with one doctor	Those who see multiple specialists
People who want coordinated care	Frequent travelers
Those in network service area	Those with complex medical needs

Exam Alert

HMO = Lowest cost managed care. MUST have PCP (gatekeeper). MUST get referrals for specialists. NO out-of-network coverage except emergencies. Compare: PPO = most flexibility, highest cost; EPO = no referrals but network-only like HMO.

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Related Terms

EPO (Exclusive Provider Organization)

Insurance

An EPO is a managed care health insurance plan that requires members to use in-network providers for all non-emergency care, but unlike HMOs, does not require a primary care physician referral to see specialists.

Coinsurance (Health Insurance)

Insurance

Coinsurance is a cost-sharing arrangement where the insured pays a percentage of covered medical expenses after the deductible is met, typically 20% with insurance paying 80%.

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