What Is HMO Health Insurance?

Nurse speaking with child in hospital waiting room.
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A health maintenance organization, or HMO, is one of several common network-based group health policies. HMO members have access to optimum benefits through a network of providers contracted by the insurance company. Preferred provider organization, or PPO, and point-of-service, or POS, plans are other popular group network options. An HMO emphasizes regular interaction with a primary care physician by requiring that you get a referral to see a specialist.

PCPs and OB/GYNs

When you enroll in an HMO, you select a primary care physician or PCP. This person is your point of contact for all routine and ongoing health management. Before seeing a specialist about a recurring knee pain, you visit the PCP. If you go directly to a specialist without a referral, your plan may deny the benefits. Some policies do have exceptions. Visits to the OB/GYN for reproductive or women's health care needs don't require a referral.

Low-Cost Advantages

HMOs are among the least expensive group plan structures. The requirement that you need referrals to see a specialist mitigates unnecessary use of specialty care providers. Group plan premiums are based on the group's cost structure. Therefore, your policy's premiums may remain stable or grow at a slower rate than other policy structures with higher costs. Also, the network setup means the health care providers involved agreed to accept lower, negotiated fees for their services. These contracted fees lower your out-of-pocket costs as well as the cost outlays for the insurance company.

Maintenance Pros and Cons

Regular visits with a PCP allow you to build a health history with one doctor. Having a single physician who is familiar with your history and prescriptions simplifies monitoring of recurring issues. Also, a quality PCP typically offers helpful advice to encourage effective self-management of preventative health care. Your doctor may work with you on an effective diet and exercise plan to trim weight or reduce cholesterol, for instance. The time-consuming process of getting referrals and making multiple office visits to ultimately have a specialist resolve a health care problem is a burden for some members.

Additional Information

One exception to the referral requirement common to many HMOs is emergency care. Policies often cover emergency treatment in the same way they do PCP or referred specialist visits, according to the Illinois Department of Insurance. Your policy may also provide benefits for emergency care you get outside of the plan network. For example, if your group's network is based mainly in North Dakota, but you vacation to Florida, your policy may cover an emergency visit to the hospital during your vacation.

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