HMO (Health Maintenance Organization)

What is an HMO?

HMO stands for Health Maintenance Organization, and the way these plans work is that you choose a primary care provider, or PCP, and they manage all of your healthcare needs. Your PCP is normally an in-network general practitioner or a healthcare professional at a similar level, such as a nurse practitioner.

Your PCP is responsible for handling basic healthcare for you. If your PCP is unable to provide a treatment or diagnosis, they will then refer you to an in-network specialist. 

How HMOs Work

Here's an example to help you understand how HMOs work. A patient is having chronic kidney stones. While the PCP can treat the stones, in this case, they are not able to determine why the patient keeps having the stones. At this point, the PCP provides a referral to their patient to see a specialist in the HMO network. 

Until a referral is provided by a patient's PCP, a visit to a specialist will not be covered by the insurance provider. However, the exception to this is if someone is in need of emergency care. 

Pros and Cons of an HMO Plan



The major benefits of selecting an HMO plans are:

Cost Effective

HMO plans tend to be cheaper than other types of health insurance plans by placing limits on the doctor you can see.  HMO Plans also require a referral from your primary care physician who will refer you to an in-network specialist.

Primary Care

HMO Plans tend to focus on preventive care more than other health insurance plan types.  This means that your yearly checkups and doctor visits will be more likely to be covered.  The reason is that HMO plans would rather pay the smaller, up front costs of preventive check ups rather than the heftier medical expenses if a medical condition is not caught until later.

Primary Care Physician

Studies have shown that the benefits of having a primary care physician are better for your health and wellness.  This includes patients being overall happier with their healthcare, and better management of medical conditions as the PCP has a vastly better understanding of your individual medical history.

Clear Path

HMO plans clearly outline the steps you need to take if you are seeking medical attention.  For example, you don’t have to spend time searching for in-network healthcare providers because your primary care physician will give you referrals. 


There are some drawbacks when selecting an HMO Plan, which include:

The Referral System

HMO plans require you to get a referral from your primary care physician before seeing a specialist.  This can lead to increased wait times before you are able to see a specialist. 

Cost Effective

Some HMO plans work by giving health providers, or your primary care physician a set amount of money for your care.  They pay for tests and procedures, and keep what is left over.  This can potentially result in your doctor not ordering tests that may be needed.  Make sure to ask your HMO plan about how they compensate their in-network health providers.

Limited Providers

HMO plans force you to choose from a list of pre-approved health providers.  This can be particularly frustrating if you have a current doctor who is not part of your HMO plan.


HMO plans make sure to review in-network health providers to make sure they are cost effective.  This means that HMO plans may review your medical records to see if your health provider is working efficiently, which can mean more people seeing your medical history.

HMO vs. PPO: What’s the Difference?

When searching for insurance plans, your options are often between HMOs and PPOs, which are also called Preferred Provider Organizations. While you are required to work with in-network providers with an HMO, you don't have to select an in-network doctor with a PPO. Additionally, you aren't necessarily required to go to your PCP for a referral before going to a specialist with a PPO. 

While you have the freedom to visit any doctor with a PPO, you won't get the same level of coverage out of your network that you would if you saw an in-network doctor. Additionally, premium costs for PPOs tend to be higher.

Find out if an HMO plan is right for you by talking to one of our experienced agents 858-771-4087, or by simply entering your zip code here!