What characterizes a "health maintenance organization" (HMO)?

A health maintenance organization (HMO) is characterized by requiring its members to utilize a specific network of doctors and hospitals for their healthcare services. This structure is designed to manage costs and ensure coordinated care within a selected group of providers. Members typically need to select a primary care physician (PCP) from within this network, who acts as a gatekeeper to other services. If members seek care outside the network without prior authorization, they may face higher out-of-pocket costs or the refusal of coverage altogether.

The HMO model encourages preventive care, with an emphasis on keeping members healthy to reduce the need for more expensive treatments. By limiting access to a network of providers, HMOs can negotiate better rates with those providers, ultimately helping to control overall healthcare costs. This approach contrasts sharply with other insurance models that allow broader access to healthcare providers and facilities.