The term HMO (Health Maintenance Organization) refers to two things:

1. A network of hospitals, doctors, and other health care providers

2. The health insurance policy which covers doctor, hospital and health care provider services under a managed care system

Under this system, doctors and other health care providers contract with the insurance company to provide specific services for a discounted rate and accept co-payments of a set rate from the covered parties. This system differs from indemnity health insurance policies in that services, fees, and patient costs are set by the insurance company and an HMO offers patients a wider variety of services at a lower cost.

The advantages of an HMO include lower annual premiums, streamlined paperwork for claims, and preventive care programs. The disadvantages are the restrictions in choosing health care providers and specialists inside the network of providers and the additional costs of choosing one outside of the network.

One of the largest providers of HMOs in the United States is Blue Cross/Blue Shield. Other major providers include Aetna, Humana and CIGNA.

Additional Resources:

America’s Health Insurance Plans, a nonprofit, non-partisan organization for U.S. healthcare advocacy

HMO Research Network, nonprofit membership organization of HMOs with research programs

National Center for Health Statistics page on HMOs