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HMO Health Insurance Plans

How does an HMO health insurance plan work? What are some of the differences between and HMO, a PPO, and a POS network? Which is the better choice? Let’s examine some of the very basics of an HMO and also which is the best network choice for you to choose!

A Health Maintenance Organization (HMO) is really a type of Managed Care Organization (MCO). MCO’s work on a purely contractual basis. What this means practically speaking is that an MCO will pre-arrange relationships with various doctors, facilities, and hospitals and then get them to sign a contract agreeing to provide medical services to the HMO’s members (or subscribers as they are sometimes called).

This contractual arrangement is good for the medical providers because they receive (hopefully) a big group of patients to provde services for from the HMO. The contractual arrangement is good for the HMO because they are able to negotiate a discount from the medical providers because they are in essence purchasing these medical services “in bulk” for all of their members.

All of this to say that an HMO is set up to be a form of pre-paid health plan set up by the MCO. This means that it is in the HMO’s best interest to keep its members healthy and out of the Doctor’s office for unnecessary care. Many HMO’s will align the physicians incentives with their own by paying the physician a flat per person fee for the physician to in turn care for the patients as needed for free (this practice is referred to as "capitation").

HMO’s stress prevention and preventative benefits such as annual checkups, physicals, immunizations, mammograms, pap smears, prostate exams, PSA tests, well baby checkups, and other preventative procedures. HMO’s do this in order to keep their members from developing a serious condition that would require costly medical procedures. HMO’s pay very close attention to making sure that their members utilize just enough of their medical provider’s service so that a potential health problem does not go undiagnosed and deteriorate. On the flip side, in an HMO many forms of costly or experimental treatments are almost never covered.

If you join an HMO your first course of action will be to choose a primary care physician (PCP). A PCP is sometimes referred to as the “gatekeeper”. Choose carefully because within the HMO you will do whatever your PCP directs and only what your PCP directs. Typically, if you have a medical need (that is non emergency) then must first go through your PCP. The PCP will evaluate your medical issue and then refer you to a specialist if needed. (You should note that with some HMO’s female members are allowed to choose an OB/GYN in addition to their PCP that they can visit without a referral).

An HMO health insurance plan is different from a PPO health insurance plan or a POS health insurance plan in some very important ways. Many people do not care for the HMO model because of it’s lack of flexibility. The 2 most important differences is the PCP (the “gatekeeper” and referral model) and the network model.

While you have to choose a PCP and get a referral before you see any other doctor with an HMO, in all PPO’s and most POS’s you do not choose a PCP and you can instead go directly to whichever doctor you like. In an HMO if you decide that you do not like your PCP then you will often have a tough time changing while in a PPO or a POS that is a non issue as you can go to whomever you like whenever you like. PPO’s and POS’s allow for much greater flexibility in this regard.

In an HMO you have absolutely no benefits if you choose to see a physician that is out of network (not a part of the MCO’s contractual arrangement). There is an exception to this rule and that is in the case of an emergency then there is almost never going to be an in-network and out of network situation. With a PPO plan or a POS plan you will still receive the discounted rates if you choose to go to an in-network provider (just like an HMO plan) but you will also receive coverage if you choose a medical provider that is not in the network. Often there is a reduced benefit with a PPO health plan or a POS health plan for choosing to go out of network but it is still a covered expense (unlike an HMO plan which offers absolutely no coverage for out of network expenses except for in the case of an emergency).

Take a few moments and enter your zip code into our free health plan finder so that you can view and compare top HMO plans side by side with top PPO and POS plans. In less time than it takes to walk up the stairs you can get many different insurance company’s free health insurance quotes!