What does 'HMO' stand for in health insurance?

In health insurance, “HMO” stands for “Health Maintenance Organization.”

An HMO is a managed-care organization that provides or arranges medical services for members, generally through a contracted network of doctors, hospitals, and other providers. Unlike traditional indemnity insurance, an HMO typically emphasizes coordinated care and may require members to choose a primary care physician who guides referrals to specialists.

The name reflects the model’s original emphasis on maintaining health through preventive and routine care, not merely paying for treatment after illness occurs. HMOs commonly receive a fixed payment per enrollee, a system known as capitation, while members may also pay premiums and copayments. The arrangement gives the organization an incentive to coordinate care and control unnecessary costs.

HMO should not be expanded as “Health Management Organization,” although that phrase sounds plausible. The term also should not be confused with a PPO, which generally offers broader provider choice and may allow specialist visits without the same referral structure. Actual rules vary by plan, and many modern plans blend features from several managed-care models.