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What Is an HMO? (Health Maintenance Organization) – Part 3

In this 3-part series, we’ve explained 2 different types of health insurance plans: CDHPs and PPOs. Today, in Part 3, we’ll talk about HMOs, or Health Maintenance Organizations.

What is an HMO?

HMOs, are typically compared to PPOs because they offer similar coverage.  An HMO, just like a PPO, has a network of doctors, hospitals, specialists, etc. that you can see for your healthcare.

The premiums for an HMO are typically lower than a PPO’s premiums because your network of providers is usually smaller – meaning you have fewer options.

The Big Difference Between a PPO and an HMO

PPOs and HMOs have a lot of similarities, but the main difference is the issue of flexibility and options. With a PPO you can research and choose whatever specialist you want to see and visit that doctor without a referral.

With an HMO, your care is coordinated through a primary care physician – generally pediatricians, internists,  or general practitioners. If you need to see a specialist, you need a referral from your primary care doctor.

Also, there is usually NO out of network benefit. That means, if you choose a provider who is out of your network, it will be as though you have no insurance coverage at all.

How Do HMOs Compare in Price?

While an HMO has limited flexibility and provider options, some people actually prefer it because the monthly premiums are usually lower. Since your network of providers is smaller, your insurance company can offer more competitive rates for the providers who are in your network.

What if You Switch Plans During Care?

Let’s say you’re currently undergoing treatment for a serious condition when your company (or you) switch to an HMO from a PPO. Are you out of luck? Do you have to stop seeing your specialist?

Not likely.

Depending on the switch, here’s what you need to do:

  1. If you moved from a PPO to an HMO with the same insurance company (Anthem PPO to Anthem HMO for example), then coordination of care should kick in and you shouldn’t have to change doctors. Your insurance company can arrange for payment to your physician.

  2. If you moved to a new insurance company, your current specialist may need to send something in to your insurance company stating that you’re currently receiving care.


  1. Save yourself time by making sure you have referrals in place before trying to schedule an appointment with a specialist. To get a referral, call your doctor’s office. They may need you to schedule an appointment with your primary care doctor.

  2. For any type of health plan, always try to choose a fair-priced provider. Hospitals tend to be much more expensive that standalone facilities for outpatient services.

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