What does the acronym HMO stand for in health care finance?

The acronym HMO stands for Health Maintenance Organization. This term refers to a type of health insurance plan that provides health services for a fixed annual fee. HMOs focus on preventive care and wellness, meaning they encourage members to utilize health services to maintain their health rather than only seeking treatment when they are ill. In this model, primary care physicians (PCPs) often act as gatekeepers, coordinating patient care and referrals to specialists within the HMO network.

This structure is designed to control costs and ensure efficient delivery of care by promoting wellness initiatives and reducing unnecessary hospital visits. Members usually have lower out-of-pocket expenses when they use services that are contracted through the HMO, underscoring the emphasis on managing care proactively. Understanding the role of HMOs in health care finance is essential, as they represent one of the foundational models in managed care.