What characterizes a health maintenance organization (HMO)?

A health maintenance organization (HMO) is characterized by requiring its members to use a specific network of providers for their healthcare services. This network is established to create efficiencies and cost savings in healthcare delivery. By restricting members to in-network providers, HMOs can manage healthcare costs more effectively and encourage preventive care, which is often part of their comprehensive coverage model.

Members of an HMO generally must choose a primary care physician (PCP) who coordinates their care and provides referrals to specialists within the network. This structure is designed to streamline the healthcare process and ensure that services are used appropriately and cost-effectively.

While HMOs do often offer comprehensive coverage and may have lower out-of-pocket costs compared to other insurance types, the defining characteristic is the reliance on an established network of providers. Allowing access to any provider, regardless of network status, is more typical of other insurance models such as PPOs (Preferred Provider Organizations) where members have broader choices. Preventive services are often not excluded in HMO plans, as they typically emphasize prevention, which can contribute to lower overall healthcare costs.