HR Glossary


Updated on:
August 23, 2022


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Table of Content

What is HMO?

A Health Maintenance Organization (HMO), also known as a health maintenance organization (HMO), is a private health insurance plan for individuals and families that provides routine health care through a network of participating providers.

Health Maintenance Organizations usually cover hospitalization, prescription drugs, and outpatient care. A Health Maintenance Organization (HMO) is a type of health insurance plan that focuses on prevention and coordinated care by a primary care physician (PCP). The PCP coordinates members’ care with in-network specialists, so members must receive a PCP’s referral to see any specialist.

Health maintenance organizations are necessary because they provide a way for people to get access to affordable healthcare. It is important for people to have access to quality healthcare so that they can stay healthy and avoid costly medical bills.

PPO or HMO, Which one is better?

A PPO is a preferred provider organization, while an HMO is a health maintenance organization.Both HMOs and PPOs are a type of managed care, so both plans have general practitioners who serve as the primary care physician for members, but HMOs typically have a network of specialists who would treat members only inside their network.PPO plans have more flexibility than HMOs, but HMO plans tend to have lower monthly premiums and deductibles. However, HMO plans typically cover members more completely than PPO plans, and HMOs give members more options for specialists.