FAQ - Health Maintenance Organizations

The health maintenance organization, or HMO as it is commonly known, was developed to help manage the rising costs related to staying healthy.

The basic principle involves captivation. Captivation simply means that the doctor is paid a fixed amount every month whether you are sick or not. This also means they have less incentive to do unnecessary surgeries or lab work. You’ll be required to pick a primary physician who agrees to the rules set forth by the health maintenance organization. That physician will act as a gateway, determining if you need to be referred to a specialist. Many HMO’s have negotiated discounts with a specific hospital. This insures that the HMO gets a good price on services. Ultimately these savings are passed on in the form of reduced insurance premiums. This information is general in nature and should not substitute for the advice of an expert in the field.