What is an HMO (Health Maintenance Organization)?

An HMO (Health Maintenance Organization) is a managed care health plan structured around a network of contracted providers. Characteristics: members must select a primary care physician (PCP) who coordinates their care; specialist visits require a PCP referral; care outside the network is generally not covered except in emergencies; lower premiums and out-of-pocket costs compared to less managed plans; emphasis on preventive care. HMOs typically pay providers on a capitated basis (a fixed monthly fee per enrolled member, regardless of services used), creating an incentive for efficient care. The trade-off is reduced flexibility — members cannot self-refer to specialists or use out-of-network providers without paying full cost. Modern HMOs sometimes offer point-of-service variations with limited out-of-network access at higher cost.