What Constitutes an HMO?

Health insurance can come in a variety of forms ranging from HMOs, PPOs and POS, or point of service, care. HMOs have a specific set of characteristic that differentiate them from other forms of managed or reduced health care plans.

Function

• An HMO or Health Maintenance Organization is a form of a managed care plan designed to minimize health costs for the patient, employer or other provider of insurance, HMO and medical facility.

Features

• HMOs create contracts between their organization and medical facilities to provide health care at a reduced cost. The providers contracted within an HMO's plan are referred to as a network.

Primary Care

• One of the requirements of this organization is the maintenance of a primary care physician or PCP. This individual is responsible for the patient's health and care, including the recommendation and referral to specialists.

In-Network Requirement

• Compared to other forms of managed care, an HMO requires individuals to seek medical professionals (both general physicians and specialists) who are part of the HMO's contracted network. Otherwise, the HMO will not cover the cost of medical diagnosis and treatment.

Benefits

• The primary purpose of an HMO is to cut costs for all individuals involved, from the patient to the insurer and health care institution. Compared to other plans, health care services with an HMO are provided at a minimized cost with only a small payment or co-pay due at the time services are rendered.