What is an HMO?
HMO stands for Health Maintenance Organization. An HMO is one kind of managed care plan.
HMO Basics
Primary care doctor:
In most HMOs you must select a main doctor, called a primary care physician, or PCP. This doctor gives you most of your care and refers you for other services when you need them. Usually, you must see this doctor first before you can see a specialist. Your primary care doctor must be in the HMO’s network.
Medical group:
Your medical group is the group of doctors and other providers that your primary care doctor is in. The medical group has a contract with the HMO to provide your care.
Networks and medical groups:
Each HMO has a network of doctors, medical groups, labs, hospitals, and other providers. You must get approval from your HMO to get care from a provider outside the network, unless it’s an emergency, or you need urgent care and are outside your plan’s area. Most of the providers you see are also in your medical group.
Check with your HMO about its network of providers. Ask the plan for a copy of its provider directory. Or look on the plan’s website.
Referrals and pre-approval:
You must have a referral to see a specialist or get most other services. Your HMO or medical group must approve many of your services before you can get them. Usually it is your primary doctor who gives you a referral and asks for pre-approval.
Check with your HMO about its rules for referrals and pre-approvals. Ask the plan for a copy of its Evidence of Coverage. Or look on the plan’s website.
Why would I choose an HMO?
- You might save on costs. HMOs have established provider networks and other plan features designed to keep your costs affordable. Be sure to look at all costs (beyond just the premium) related to the care you need and providers you prefer seeing.
- You want to have a primary care doctor who can help you manage your care. A primary care doctor can help you decide what other care you need and how to get it.
- You want to simplify your health care costs. Usually the only costs you pay in an HMO are set co-pays. You do not get a bill for a percent of the cost of the service. And you do not have to submit claims.
Why would I NOT choose an HMO?
- You want to be able to see specialists and other providers when you want to, without having to get a referral and pre-approval.
- You want the flexibility to see providers who are not in the network, even if you have to pay more.
HMO Costs
| Term | Description |
|---|---|
| Premium | The fee an HMO charges each month to maintain your coverage. The total premium is what you pay PLUS what your employer pays. |
| Co-Pay | The flat fee that you pay each time you see a doctor or get services. Doctor visits, prescription drugs, emergency room visits, and hospital stays have different co-pays. |
| Co-Insurance | Some HMOs charge you a co-insurance instead of a co-pay. The co-insurance is a percent of the cost of a service. |
| Yearly Deductible | Some HMOs have a yearly deductible. This is the amount you must pay each year to providers before your HMO pays anything. The yearly deductible does not apply to preventive services. From the beginning of the year, you only pay the co-pay for preventive checkups, family planning services, maternity/prenatal care, and some other services. You may pay a separate yearly deductible for prescription drugs. |
| Out-of-Pocket Maximum | This is the total you have to pay each year for most of your services. However, you still pay co-pays for some services, including prescription drugs and most medical equipment, even after you meet your yearly maximum. |
| Hospital Costs | If you have a co-pay for a hospital stay, it can be several hundred dollars. If you pay a co-insurance, you pay a percent of the hospital costs. This can be very expensive. |