What is an HMO?
An HMO, or Health Maintenance Organization, is a type of managed care health insurance plan. HMOs typically offer lower costs, but you will have a more restrictive provider network, and you will have to coordinate your medical care through a primary care physician (PCP).
Managed care plans try to reduce the cost of medical care while still maintaining quality care. HMOs were created as lower-cost alternatives to traditional payment models of medical care, like Fee-for-Service plans (also known as “Traditional” or “Indemnity” plans), where coverage is provided no matter what provider or hospital you use.
Like a PPO plan, an HMO plan has a network of doctors and hospitals that you can use. However, HMO networks are usually smaller than PPO networks. Providers in these “narrow” networks agree to accept lower payments in exchange for access to patients in the insurer’s network. If you visit a provider who is not in the network, you will be responsible for paying the entire cost (except in the case of an emergency).
HMOs and Primary Care Physicians
With some HMO plans, you may be required to choose a PCP. Your PCP will probably be part of a medical group, like a hospital system. Using a PCP in an HMO plan is another way to contain costs. Care can be more efficient because one provider is coordinating it. Your PCP will be your main point of contact for all of your healthcare needs.
You may need a PCP referral for certain tests or to see a specialist. In some cases, you may also need to be pre-approved before receiving certain services. Your PCP will usually be the person to approve these services. This keeps costs down by ensuring specialized care is medically necessary.
HMO plans typically have the lowest out-of-pocket costs and monthly premiums. Depending on the plan, you may have no deductible or a low deductible. However, you will need to be prepared to pay 100 percent of costs if you use a provider who is not part of your HMO network.
Pros and Cons of an HMO Plan
The HMO plan features often considered most attractive are related to cost. Premiums are generally lower, and plans often have low or no deductible. Less attractive features typically include the requirement to select a primary care physician (PCP), the need to obtain a referral from your PCP to see a specialist, and a lack of non-emergency coverage outside of the HMO provider network.
HMO Vs. PPO: How Do They Compare?
To determine what plan is best for you, you should compare different plan types. Our “PPO & HMO Health Plan Differences” article makes comparing these two types of plans easy.
HMO Plans from Medical Mutual
Medical Mutual’s Individual HMO plans offer your more flexibility because we do not require you to select a PCP or have a referral. We have partnered with health systems across Ohio to bring Medical Mutual HMO plans to a number of Ohio counties. Learn more about the plans we offer.
If you're looking for Medicare HMO plans, you can learn more about our Medicare Advantage HMO plans.