when deciding whether to choose an hmo plan you should take into consideration 
an hmo is an organized public or private entity that provides basic and supplemental health services to its subscribers the organization secures its network of health providers by entering into contracts with pcps clinical facilities and specialists the medical entities that enter into contracts with the hmo are paid an agreed upon fee to offer a range of services to the hmo s subscribers the agreed payment allows an hmo to offer lower premiums than other types of health insurance plans while retaining a high quality of care from its network the hmo as it exists today was established under the health maintenance organization act of 1973 signed by then president richard nixon the law clarified the definition of hmos as a public or private entity organized to provide basic and supplemental health services to its members the law further requires that plans provide insured individuals with basic healthcare in exchange for regular fixed premiums that are established under a community rating system 2hmo subscribers pay a monthly or annual premium to access medical services in the organization s network of providers but they are limited to receiving their care and services from doctors within the hmo network however some out of network services including emergency care and dialysis can be covered under the hmo those who are insured under an hmo may have to live or work in the plan s network area to be eligible for coverage in cases where a subscriber receives urgent care while out of the hmo network region the hmo may cover the expenses but hmo subscribers who receive nonemergency out of network care have to pay for it out of pocket 3in addition to low premiums there are typically low or no deductibles with an hmo instead the organization charges a co pay for each clinical visit test or prescription 4the insured party must choose a pcp from the network of local healthcare providers under an hmo plan a pcp is typically an individual s first point of contact for all health related issues this means that an insured person cannot see a specialist without first receiving a referral from their pcp however certain specialized services may not require a referral for example screening mammograms in most cases will not require a doctor s referral 5specialists to whom pcps typically refer insured members are within the hmo coverage so their services are covered under the hmo plan after co pays are made if a pcp leaves the network subscribers are notified and are required to choose another pcp from within the hmo plan hmos are regulated by both states and the federal government the mccarran ferguson act of 1945 established that states regulate the insurance industry and no federal law overrides state regulation unless it explicitly does so 6as such regulation of health insurance is left largely to the states though legislation such as the hmo act of 1973 and the employee retirement income security act of 1974 among other laws can bring some aspects of the health insurance business under the purview of the federal government 7that said the federal government does maintain some oversight of hmos the 2010 dodd frank act created the federal insurance office fio which can monitor all aspects of the insurance industry 8the affordable care act of 2010 created an agency charged with overseeing the implementation of the act s provisions called the center for consumer information and insurance oversight cciio 9hmo vs preferred provider organization ppo a preferred provider organization ppo is a medical care plan in which health professionals and facilities provide services to subscribed clients at reduced rates ppo medical and healthcare providers are called preferred providers 10ppo participants are free to use the services of any provider within their network out of network care is available but it costs more to the insured in contrast to ppo plans hmo plans require that participants receive healthcare services from an assigned provider ppo plans usually have deductibles while hmo plans usually do not 11both programs allow for specialist services however the designated pcp must provide a referral to a specialist under an hmo plan ppo plans are the oldest and due to their flexibility and relatively low out of pocket costs have been the most popular managed healthcare plans that has been changing however as plans have reduced the size of their provider networks and taken other steps to control costs hmo vs point of service pos a point of service pos plan is like an hmo plan in that it requires a policyholder to choose an in network pcp and get referrals from that doctor if they want the plan to cover a specialist s services a pos plan is also like a ppo plan in that it still provides coverage for out of network services but the policyholder has to pay more for those services than if they used in network providers however a pos plan will pay more toward an out of network service if the policyholder gets a referral from their pcp than if they don t secure a referral the premiums for a pos plan fall between the lower premiums offered by an hmo and the higher premiums of a ppo pos plans require the policyholder to make co pays but in network co pays are often just 10 to 25 per appointment pos plans also do not have deductibles for in network services which is a significant advantage over ppos also pos plans offer nationwide coverage which benefits patients who travel frequently a disadvantage is that out of network deductibles tend to be high for pos plans so patients who use out of network services will pay the full cost of care out of pocket until they reach the plan s deductible however a patient who never uses a pos plan s out of network services probably would be better off with an hmo because of its lower premiums if you don t travel frequently you ll be better off with an hmo plan than a pos plan because of the lower costs advantages and disadvantages of hmosit s important to weigh the advantages and disadvantages of hmo plans before you choose a plan just as you would with any other option we ve listed some of the most common pros and cons of the program below lower out of pocket costsprimary care physician directing your treatmenthigher quality of caremust use medical professionals in the plan s networkno specialist visits without a referralemergencies must meet certain conditionslower out of pocket costs you ll pay fixed premiums on a monthly or annual basis that are lower than traditional forms of health insurance these plans tend to come with low or no deductibles and your co pays are generally lower than other plans your out of pocket costs will also be lower for your prescription billing also tends to be less complicated primary care physician directing your treatment you ll have a pcp who you choose and who is responsible for managing your treatment and care this professional will also advocate for services on your behalf this includes making referrals for specialty services for you higher quality of care the quality of care is generally higher with an hmo plan that is because patients are encouraged to get annual physicals and seek out treatment early must use medical professionals in the plan s network you re restricted on how you can use the plan you ll have to designate a doctor who will be responsible for your healthcare needs including your primary care and referrals however this doctor must be part of the network this means that you are responsible for any costs incurred if you see someone out of the network even if there s no contracted doctor in your area no specialist visits without a referral you ll need referrals for any specialists if you want your hmo to pay for any visits if you need to visit a rheumatologist or a dermatologist for example your pcp must make a referral before you can see one for the plan to pay for your visit if not you re responsible for the entire cost emergencies must meet certain conditions there are very specific conditions that you must meet for certain medical claims such as emergencies for instance there are usually very strict definitions of what constitutes an emergency if your condition doesn t fit the criteria then the hmo plan won t pay 