Health Maintenance Organization

A health plan covering care only within a contracted network, coordinated by a primary care physician.

Overview

Members choose a primary doctor who manages care and writes referrals to specialists, and care outside the network is generally not covered except emergencies. Premiums and out of pocket costs are the lowest among the major plan types and preventive care is usually covered fully. The tradeoff is rigidity: skipping a referral can leave the member with the entire bill. HMOs pay providers through capitation or negotiated rates that reward keeping patients healthy and steering them to efficient care. They dominated the managed care era of the 1980s and 1990s and remain common in employer plans and Medicare Advantage. They suit people comfortable changing doctors to join a network who value predictability over breadth of choice.