In a very general sense, HMOs offer predictable cost-sharing and administrative simplicity for patients. These features come with fairly restrictive rules about which providers patients may see. Participants are entitled to doctor visits, preventive care and medical treatment from providers who are in the HMO’s network. In addition to the monthly premium (which may be shared by the employer and employee), participants usually need to pay a small fee at the time of service called a copay (often in the range of $10 to $30), while the HMO covers 100% of the services provided. Most HMOs use capitation arrangements to reimburse physicians.
HMOs typically require patients to select a “primary care physician” who can refer patients to specialists, also within the HMO’s network. HMOs often won’t pay for medical care that wasn’t referred by the primary care physician (some exceptions include emergency services or preventive gynecological exams). They may also require prior authorization before elective hospitalizations or require referrals from primary care physicians before seeing certain specialists.