What is an essential characteristic of an HMO?

An essential characteristic of a Health Maintenance Organization (HMO) is the strict requirements to use network providers for care. HMOs are structured around the idea of providing comprehensive, coordinated care to their members. This structure typically means that members must choose a primary care physician (PCP) who oversees their healthcare and provides referrals to specialists within the network. The emphasis on network providers helps keep costs down for both the organization and its members.

By requiring members to use a network of healthcare providers, HMOs can negotiate lower rates for services, which can lead to reduced premiums and overall healthcare costs. This characteristic is foundational to how HMOs operate and distinguishes them from other types of health insurance plans that may allow for more flexibility in provider choice, such as Preferred Provider Organizations (PPOs).