What is a health maintenance organization (HMO)?

A health maintenance organization (HMO) is defined as a type of health insurance plan that requires members to use a defined network of doctors, hospitals, and healthcare providers. This structure is designed to manage healthcare costs and promote coordinated care by requiring members to choose a primary care physician (PCP) who acts as a gatekeeper for referrals to specialists and other services. Members typically must obtain referrals from their PCP to see specialists and may not receive coverage for services provided by out-of-network providers, except in emergencies.

This model encourages preventive health measures and wellness programs, as the HMO is focused on maintaining the health of its members to reduce the overall costs associated with healthcare. The use of specific providers also allows HMOs to negotiate better rates with healthcare facilities and doctors, which can lead to lower premiums for members compared to other types of insurance plans that have more flexible networks.