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Health Maintenance Organizations (HMOs)
In a very general sense, HMOs offer predictable cost-sharing and administrative simplicity for members, along with fairly restrictive rules on which providers members may see. Participants are entitled to doctor visits, preventive care, and medical treatment from providers who are in the HMO's network. In addition to the monthly premium (which may be shared by the employer and employee), participants usually need to pay a small fee at the time of service, called a copay (often in the range of $10 to $20), and the HMO covers 100 percent of the services provided. Most HMOs use capitation arrangements to reimburse physicians.
HMOs typically require members to select a "primary care physician" (PCP) who can refer them to specialists, also within the HMO's network. HMOs often won't pay for medical care that wasn't referred by the primary care physician (some exceptions include emergency services or preventive gynecological exams). They may also require prior authorization for elective care or referrals.
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