health maintenance organizations

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Health maintenance organizations (HMO) are a popular type of medical insurance provider, characterized by their limited costs and eligible service provider system. HMOs provide medical insurance with low periodic premiums in exchange for only covering work performed from medical professionals within their network. HMOs also tend to charge low or no deductibles and limited copays. They achieve these prices by hiring doctors directly or through contract to provide coverage for their patients. Individuals when needing to receive medical treatment under an HMO generally must see only doctors within their network except for emergency services. This is in contrast with Preferred Provider Organizations (PPO) who, while charging more for out of network services, still provide some coverage. HMOs must be registered with state agencies and must follow federal and state regulations on their activities such as not increasing payments or limiting coverage after an individual uses the insurance for basic health needs. 

See also: Health law

[Last updated in February of 2022 by the Wex Definitions Team