What is a 'health maintenance organization' (HMO)?

A health maintenance organization (HMO) is a specific type of managed care health insurance plan that requires its members to use a defined network of doctors, hospitals, and other healthcare providers for their medical care. This structure encourages members to seek care from within the network, which often results in lower costs for both the members and the health plan, as well as better management of care.

HMOs typically emphasize preventive services, requiring members to select a primary care physician (PCP) who acts as a gatekeeper to manage the member's overall healthcare. By using a network model, HMOs can negotiate lower rates with providers, keep costs down, and facilitate coordinated care among different healthcare providers, enhancing both efficiency and quality of care.

The other options do not fully encapsulate the characteristics of an HMO. While option B describes a plan with open access to any doctor, that describes a preferred provider organization (PPO), which offers more flexibility but often at higher costs. Option C refers to a focus on preventive care, which is a component of HMOs but does not define them as a whole. Lastly, option D incorrectly implies that HMOs are exclusive to high-risk individuals, while they are available to a broad population without such restrictions.