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A health maintenance organization (HMO) is one of the primary forms of managed care available to American employees. An HMO is a medical insurance plan under which employees can choose a primary care physician (PCP) from within an HMO network. HMO plans require users to choose from a select group of health care providers who offer medical services at a lower rate for patients within their plan network. Medical providers who contract with the HMO receive a fee for providing a specific range of health care services. That fee allows HMO members to set lower premiums while offering high quality medical care. Out of pocket expenses are generally lower for the consumer, and claims usually do not need to be submitted to an insurance company.
The most common alternative to an HMO is a preferred provider organization (PPO). The HMO vs. PPO conversation largely revolves around flexibility. Like an HMO, a PPO also limits employees to a specific network of doctors, but without as many restrictions on out-of-network care. PPO plans offer coverage for more medical services outside of your immediate network than do HMOs, usually at the cost of higher premiums and deductibles.