HMO Plans (Health Maintenance Organizations)

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HMO plans are a kind of managed care health insurance plan. HMO's, also known as health maintenance organizations, are companies that have contracts with doctors and other health care providers and they are directly involved in the medical treatment of their customers.

While HMO health insurance plans are generally the cheapest kind of coverage available, they are also the most restrictive. These usually have a deductible but no coinsurance requirement.

How an HMO Works

Most of these plans require that a primary care physician (PCP) be designated by recipients who join the HMO. That physician is the gateway to all health care providers. If you are a member of an HMO, your primary care physician and all referrals must be members of the network that the HMO plan has contracted with to provide services.

If an HMO member tries to visit a medical practitioner with no a referral from the PCP, the visit or treatment will not be paid for by the policy. This is a primary crticism of HMO's because it greatly limits the freedom of the insured individuals when it comes to controlling their own health care needs.

HMO plans and PPO plans, also known as preferred provider organizations, use management controls such as the PCP limitation and a focus on preventative care to lower the cost of healthcare.

HMO plan members pay a monthly premium regardless of their medical needs. In return for the premium, the HMO provide various medical services, from checkups to surgery. Medical services are normally only paid for if the person uses a provider in the HMO network and goes through their primary care doctor. Network sizes vary widely, so be sure to check the list of health care providers in your area.

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Advantages and Disadvantages of HMO's

Though HMO's have been widely-criticized in recent years, they are still a very popular and effective type of health insurance coverage for many people. Below is a list of advantages and disadvantages of HMO medical plans that should be considered when deciding if this type of coverage is right for you.

Advantages of HMO Plans	Disadvantages of HMO Plans
Preventative Care HMO plans encourage members to seek medical treatment early and to have annual checkups. They are focused on wellness and many HMOs offer information to their members about staying healthy.	Primary Care Physician Gateway Specialized medical attention can be more difficult to obtain with an HMO plan. The PCP is the access to all health care services you can't see a specialist without a referral. This helps the health insurance company reduce expenses for its HMO members and the company.
Least Expensive Health Insurance There is usually not a coinsurance requirement with HMO plans. Instead of a deductible, most HMO plans have small co-payments for medical services and treatments. So, regardless of your medical needs, a HMO plan will probably just charge you the monthly premium and a small co-payment.	No Coverage for Out-of-Network HMO insurance will probably not cover a visit to a doctor who is not in the HMO network, even if there are no network providers in the area.
No Lifetime Maximum Payout Unlike other health insurance plans, many HMO policies do not have a lifetime maximum payout. They will pay for your medical needs as long as you are a member.	Strict definitions The definitions for HMO plans tend to be limited. For example, an emergency room visit may only be covered if it meets the company's definition of an emergency, which could be surprisingly restrictive.
Less complicated billing Billing systems for HMOs are usually less complex than other programs, so customers experience less problems.	More difficult to change doctors Many HMOs discourage you from changing primary care physicians. You may be limited to changing your primary care doctor once or twice.
	Patient quotas Physicians who participate in HMOs are often required to see a minimum number of patients every day. This could limit the time your doctor can spend addressing your needs. Some doctors receive a particular amount from a HMO plan regardless of the number of patients they see, making it preferable for the doctor to have less appointments.
	Tests Many HMOs require that diagnostic tests be approved before they will be paid for. This could delay your health care treatment.