An HMO, or health maintenance organization, is a system for providing health insurance coverage for all medical services including hospital services, for a fixed monthly or yearly cost. Like any health insurance policy, the insured party is subject to usual costs over and above their premiums such as co-payments and occasionally, deductibles. Also, like other types of health insurance coverage, the maximum amount that you have to pay during the term of the policy is determined by your out-of-pocket limit.

Generally, the co-payments for the pre paid services covered by the plan are $20 for a visit to the doctor's office that costs $80; the HMO pays the balance. Although most plans that provide pre paid services do not have deductibles for covered medical services, they will charge one for services that are provided by a physician or facility that is not a part of the HMO. Members of these plans are free to use all of the services that are offered at will and for no additional cost.

The purpose of managed care programs like HMO's is to provide a way for its customers to get quality health care for less than traditional health insurance plans. This is accomplished by establishing a network of doctors and hospitals that are a part of the organization. They may be affiliated on a contractual basis or, as in the case with some doctors; they may be actual employees of the HMO. The physicians and hospitals within the network provide their services for a standard, predetermined rate. In this way, the HMO knows what the cost associated with any procedure will be in advance and can adjust its premiums accordingly.

In order to take advantage of the lower prices offered by this type of health insurance, the policy holder must choose his primary care physician from a list provided by the HMO. This doctor makes all of the decisions about the patient's health care and makes referrals to specialists who are also a part of the organization. By establishing costs for the pre paid services that are available through the HMO, the company can manage costs and pass the saving on to the policy holder.

There have been some criticisms of the HMO model because patients have limited choices of primary care providers and specialists. For some patients, it is necessary to stop seeing a doctor with whom he may have an excellent and lengthy relationship. Some HMO's know as open-ended, allow patients to visit doctors who are not part of the plan for an additional cost.

It is a fact that this method of delivering pre paid services to patients, makes quality health care more accessible and affordable.

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