Typical HMO features: care from doctors who work for or contract with the plan, a requirement to live or work in the plan's service area, and a focus on prevention, wellness and integrated care. An HMO generally does not cover out-of-network care except in an emergency. The primary care physician acts as the gatekeeper: for a nonemergency specialist visit, the enrollee sees the PCP first for a referral. Booking a specialist alone and sending in a claim is how indemnity insurance works, and an HMO generally would not cover it.

Capitation: the HMO pays a provider a set amount per enrollee for a period, regardless of how much care each person uses. Example: $25 a month for each assigned enrollee, whether that person visits ten times or never. Fee-for-service is the opposite: the provider is paid for each visit or procedure, so income rises with volume.

No bonuses for saying no. California bars incentive plans that make a specific payment to a provider as an inducement to deny, reduce, limit or delay specific, medically necessary care for a specific enrollee or group of enrollees with similar conditions (HSC §1348.6(a)). General arrangements, such as capitation and shared-risk arrangements not tied to specific medical decisions, are allowed (§1348.6(b)).

Hold harmless: every plan-provider contract must say that the enrollee is not liable for sums the plan owes the provider, and a contracting provider may not collect those sums from the enrollee or sue the enrollee for them, even if the contract leaves the clause out (HSC §1379). The enrollee still owes his or her own cost sharing, such as a copayment.

Emergencies: emergency services and out-of-area coverage are basic health care services. A plan must reimburse providers for emergency care until the patient is stabilized and may not require authorization before that care, even at a noncontracting hospital outside the service area. A plan may require authorization only for care after stabilization (HSC §1371.4(b)–(c), §1345(b)(6), (h)).