HMO (or health maintenance organization) health insurance plans provide insurance if you receive services from an in-network provider. The only out-of-network services available are those on an emergency basis. Many HMOs require enrollees to see a primary care physician (PCP) chosen by the member who will refer them to a specialist if deemed necessary for high-cost services like MRIs or surgeries. HMOs typically provide richer coverage than a PPO health insurance plan. However, they often cost more due to the better benefits.
HMO plans often do not include deductibles, but copays are charged per office. HMO plans typically allow a member to have lower out-of-pocket healthcare costs, but require the member to forego some choice and flexibility with regard to selecting physicians and hospitals.
In the individual and family health insurance market, some very good HMOs are available from Kaiser in California, Colorado, Maryland and other states, Anthem offers them in Connecticut, Aetna does in the Philadelphia area, and Health Net has some very attractive HMO plans in Arizona and California. These plans often cover maternity, which most PPO plans in the individual market do not cover. Health Net has some very attractive HMO plans in Arizona and California.
Because an HMP plan will not pay for you to see an out-of-network provider except in an emergency, it is very important to ensure that your existing doctors and a high quality hospital in your area are in your network. This ensures that in both routine and unforeseen circumstance you have access to high quality health care providers in your area.
HMOs were introduced in 1974 by enabling federal legislation that ultimately spurred the creation and growth of many large HMOs across the country. HMOs came under heavy criticism because of their tight cost controls, referrals, second opinions, pre-certifications, and other stringent cost controls. Many of those cost controls have been replaced with higher cost-sharing. For instance, for many HMOs a specialist referral has been replaced with a split copay for physician visits. Copays that might have been $20 to see a physician with a specialist referral have largely been replaced with a $20 copay for physician, $40 copay for specialist setup. But the HMOs still retain their rich preventive and other benefits provided you stay in network.