New Hampshire · Accident & Health SampleInteractive Mind Map
Health Maintenance Organizations (HMOs)
A visual breakdown of Health Maintenance Organizations (HMOs) — one of the concepts you can count on seeing on the exam.
The TESTivity Interactive Mind Mapping Graphic we picked for the New Hampshire Health Insurance sample is Health Maintenance Organizations (HMOs) — and this is a concept you can count on seeing on your pre-licensing exam. Get the structure straight once and those questions turn into free points.
So explore it. Click through, see how the pieces relate, and let the layout do some of the remembering for you.
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HMOs are the original managed care — they don’t just reimburse care, they organize and manage it.
The whole model is a trade: lower cost in exchange for restricted choice. Start with the machinery that makes the savings possible.
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Closed Provider Network
Members must use network providers; out-of-network care is generally not covered (except emergencies). This restriction is the main cost-control lever — the HMO negotiates discounted rates.
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Capitation
The HMO pays network physicians a fixed monthly amount per enrolled member, regardless of services used. That flips the incentive toward prevention and away from unnecessary care.
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Lower Cost, No Balance Billing
Lower premiums and copays, often little or no deductible. Network providers accept the HMO’s payment as payment in full — balance billing is prohibited in-network.
How they test this“$150 per enrolled member per month, regardless of services used” = capitation (not fee-for-service, not UCR). And the HMO trade-off in one breath: lower cost, restricted network, PCP gatekeeper.
The most tested HMO feature: you can’t go straight to a specialist — your PCP is the gate.
Each member picks a Primary Care Physician who coordinates all care and controls access to specialists.
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The PCP Gatekeeper
Your entry point into the whole system
Each member selects (or is assigned) a PCP — family physician, internist, pediatrician, or GP.
The PCP provides routine care, manages chronic conditions, and coordinates everything.
Referral required: to see a specialist, the member must first get a PCP referral. Without it, the specialist visit may not be covered (except emergencies).
The path to a specialist
Member → PCP visit → PCP decides specialist care is needed → PCP issues referral → member sees a network specialist.
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Open-Access (Direct-Access) HMO
A modern variant that lets members self-refer to network specialists with no PCP referral — it drops the gatekeeper but keeps the closed network.
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The single most tested HMO point
Under a traditional HMO, members cannot self-refer to specialists — the PCP referral is mandatory (except emergencies). A self-referral to an orthopedist without a PCP referral is not covered. This referral requirement is the line that separates HMOs from PPOs.
HMOs lean hard on prevention — and they can’t turn you away in a true emergency, network or not.
Two protections that matter: free preventive care under the ACA, and guaranteed emergency coverage under the prudent-layperson standard.
🩸 Preventive Care
🚑 Emergency Care
The philosophy
Keeping members healthy now is cheaper than treating disease later — prevention is a cost-control strategy.
Must be covered
HMOs must cover genuine emergencies even out-of-network — coverage can’t be denied for skipping a referral or network facility.
ACA mandate
ACA plans (including HMOs) must cover USPSTF Grade A & B services with no cost-sharing — no copay, no deductible.
Prudent layperson
An emergency is what a reasonable person would believe needs immediate care to avoid serious harm.
The HMO may require transfer to a network facility for continued non-emergency care.
How they test thisOut-of-state chest pain, nearest ER is out-of-network — the HMO must cover it (cost-sharing may still apply, but coverage can’t be denied). On preventive care, the covered service itself carries no copay or deductible — though treating a condition discovered during the visit may.
HMOs come in four structural models — differing mainly in how the doctors are organized.
Two exam favorites: staff = doctors are HMO employees (think Kaiser); IPA = the most prevalent model.
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Staff Model
The HMO directly employs salaried physicians at HMO-owned facilities (e.g., Kaiser Permanente). Most cost control; least flexibility for members.
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Group Model
The HMO contracts with a single large physician group. The group employs the doctors and takes capitation from the HMO.
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Network Model
The HMO contracts with multiple physician groups. Members may see doctors from any contracted group.
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IPA Model
Most prevalent. The HMO contracts with an Independent Practice Association — independent doctors in private practice who see HMO and non-HMO patients in their own offices at negotiated rates.
How they test this“Independent physicians in private practice who see both HMO and non-HMO patients in their own offices” = IPA model. “Directly employs salaried doctors at its own facilities” = staff model. Single group vs. multiple groups separates group from network.
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Top Exam Tips — HMOs
1. HMO trade-off: lower cost (premiums, copays) in exchange for a closed network and a PCP gatekeeper. 2. The #1 tested point: traditional HMO members cannot self-refer to specialists — PCP referral required (except emergencies). Open-access HMOs drop that. 3. Capitation = fixed per-member-per-month payment, regardless of services — rewards prevention. 4. Emergencies are covered out-of-network (prudent-layperson standard); coverage can’t be denied for skipping a referral. 5. ACA preventive care (USPSTF A & B) is covered with no cost-sharing. 6. Models: staff = employed doctors (Kaiser); IPA = most prevalent (independent private practices); group = one group; network = multiple groups.
Exam vocabulary
Key Terms to Know
HMO (Health Maintenance Organization)
Managed care providing comprehensive care through a closed network; out-of-network care isn’t covered except emergencies.
Closed Provider Network
Members must use network providers; out-of-network care is not covered except in emergencies.
Capitation
A fixed monthly payment per enrolled member to a provider, regardless of services rendered; incentivizes prevention.
Primary Care Physician (PCP)
The member’s designated physician who provides routine care and coordinates specialist referrals.
Gatekeeper
The PCP’s role as the entry point to care; members need a PCP referral to see specialists.
Referral (HMO)
A PCP’s authorization for a specialist visit; required in traditional HMOs, not in open-access HMOs.
Open-Access HMO
An HMO allowing self-referral to network specialists without a PCP referral; keeps the closed network.
Prudent Layperson Standard
The legal test for an emergency: what a reasonable person would believe requires immediate care to prevent serious harm.
Staff Model HMO
The HMO directly employs salaried physicians; most cost control, least flexibility (e.g., Kaiser).
IPA Model HMO
The HMO contracts with an association of independent private-practice physicians; the most prevalent model.
Balance Billing
A provider billing the patient for the difference above the plan’s payment; prohibited for in-network HMO providers.
USPSTF Preventive Services
Grade A and B preventive services that ACA-compliant plans must cover with no cost-sharing.
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