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CT Department of Insurance, Health Insurance Product Information
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Health Maintenance Organization (HMO)
A Health Maintenance Organization (HMO) provides a wide range of benefits that cover the entire health care spectrum, from preventive care and education to physician care, surgery and hospitalization. Health care is typically managed by primary care physicians, specialists, hospitals and labs inside the provider network, with premiums and co-payment for certain services or prescriptions.
Since contracting discounts from a network of providers is one of the primary ways an HMO maintains cost effectiveness, treatment received outside the network is usually not covered. While an HMO is more restrictive than other plans, doctor visits and health care can be simple, easy and reliable. If there is a need to see a specialist, the doctor will recommend appropriate resources and often make the scheduled appointment on the patient’s behalf.1
Advantages of HMOs |
Disadvantages of HMOs |
| Preventive CareHMO plans are focused on wellness and encourage members to seek medical treatment early and to have annual checkups. HMOs often provide helpful and timely information to their members about staying healthy. | Primary Care Physician RestrictionsSpecialized medical attention can be more difficult to obtain with an HMO plan and members cannot see a specialist without a referral from their Primary Care Physician. |
| Least Expensive Health InsuranceInstead of a deductible, most HMO plans have monthly premiums and small co-payments for medical services and treatments, regardless of a member’s medical needs. | No Coverage for Out-of-Network ServicesHMOs will likely not cover a visit to a doctor not in the HMO network, even if there are no network providers in the area. |
| No Lifetime Maximum PayoutUnlike other health insurance plans, many HMO policies do not have a lifetime maximum payout. They will pay for medical needs as long as people are members of the plan. | Strict DefinitionsThe definitions for HMO plans tend to be very limited. For example, an emergency room visit may only be covered if it meets the company’s definition of an “emergency.” |
| Less Complicated BillingBilling systems for HMOs are usually less complex than other plans, so members experience fewer problems. | Patient QuotasPhysicians who participate in HMOs are typically required to see a minimum number of patients every day. This limits the time they can spend with a patient to address their needs. |
| More Difficult to Change DoctorsMany HMOs discourage members from changing primary care physicians and may limit changing primary care doctor to once or twice over time. | |
| TestsMany HMOs require that diagnostic tests be approved before payment. This can delay health care treatment until paperwork is resolved.2 |
1Connecticut Insurance Department, “Health Insurance Product Information” http://www.ct.gov/cid/cwp/view.asp?q=390270
2Individual Health Plans, “Health Maintenance Organizations” http://www.individual-health-plans.com/hmoplan.htm