Definition:

Health Maintenance Organization

Application:

This organization takes a financial risk to provide members with specific medical services for a fixed price and for a given period of time. A person with an HMO must choose a physician as their PCP (primary care physician). This PCP acts as a "gatekeeper" for medical services to specialists. An HMO does not allow a person to see a physician outside of their network, as it is not a covered expense. The HMO plan exerts a great deal of control over its HMO physicians because the health plan is an integral part of the medical decision making. This results in the HMO being more effective in controlling costs, by paying physicians on a capitated basis and monitoring costs involved in treating patients, such as reviewing utilization rates, referral patterns, and methods of treatment.

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