A managed care arrangement that:

HMO eligibility may be limited to individuals who live or work in a certain geographical area. Participants in an HMO must generally designate a primary care provider that is responsible for furnishing referrals for other health care services, including specialty care. HMOs also typically employ cost-controlling measures (such as preauthorization and utilization review) and may furnish guidelines to providers regarding appropriate levels of care.

HMO usually do not cover services provided by out-of-network providers except for:

For more information, see Practice Note, Health Care Payors and Reimbursement: Overview and Group Health Plans and Health Insurance Toolkit.