Which statement describes Health Maintenance Organization (HMO)?

• A. A type of health insurance plan that pays per service.
• B. A type of managed care plan that provides services for a prepaid cost, typically requiring a primary care physician.
• C. A plan with network access and no referral required.
• D. A universal system financed by taxes.

Answer: (B)

Health Maintenance Organization is a type of managed care plan that emphasizes cost control and coordinated care. It operates on prepaid funding: you pay a fixed premium to access a network of doctors and facilities, rather than paying for each service separately. A defining feature is the primary care physician acting as a gatekeeper who oversees your care and must provide referrals to specialists, helping manage costs and ensure appropriate treatment. Because care is delivered within a limited network, out-of-network coverage is typically restricted, except in emergencies. This setup differs from plans that pay per service, where you’re billed for each visit or procedure; from plans that allow seeing specialists without referrals; and from universal tax-funded systems financed by taxes rather than insurance premiums.