What defines a Health Maintenance Organization (HMO)?

A Health Maintenance Organization (HMO) is primarily defined by its requirement for members to use a specific network of healthcare providers. This structure is designed to manage costs and ensure coordinated care by offering a comprehensive range of medical services through a network of doctors, hospitals, and other healthcare providers. Members typically need a primary care physician who will manage their healthcare and provide referrals to specialists within the network.

This arrangement allows HMOs to negotiate lower costs and provide services in a more controlled environment, often resulting in lower premiums for enrollees. By contrast, options that suggest unrestricted choice of doctors or a focus solely on preventive care do not accurately describe the fundamental operation of an HMO. While preventive care is certainly a focus, it is not the defining characteristic that differentiates HMOs from other types of health insurance plans. Furthermore, although some government programs may involve managed care similar to HMOs, defining them solely as a government-funded healthcare program is inaccurate, as many HMOs are private entities.