Medicaid and HMOs are not the same thing, but they frequently overlap. Medicaid is a government health insurance program for people with low incomes, while an HMO (Health Maintenance Organization) is a way of delivering and paying for healthcare. Most states use HMO-style plans to provide Medicaid benefits, which means the majority of Medicaid enrollees are actually in an HMO. About 73 percent of Medicaid beneficiaries are enrolled in a comprehensive managed care plan that works like an HMO.
How Medicaid and HMOs Connect
When you qualify for Medicaid, your state decides how your healthcare gets delivered. There are two main approaches: fee-for-service and managed care. In fee-for-service Medicaid, the state pays doctors and hospitals directly each time you receive care. In managed care Medicaid, the state pays a private insurance company a fixed monthly amount per person, and that company handles your healthcare through an HMO-style plan.
As of 2024, 42 states (including Washington, D.C.) contract with private managed care plans to cover at least some of their Medicaid population. In most of these states, managed care is the default. When you enroll in Medicaid, you’re assigned to or asked to choose a managed care plan run by a private company. That plan operates like an HMO: it has a network of doctors, requires you to pick a primary care provider, and manages referrals to specialists.
What a Medicaid HMO Looks Like Day to Day
If your Medicaid coverage comes through a managed care plan, your experience will feel very similar to having a commercial HMO through an employer. You’ll typically need to choose a primary care doctor from the plan’s network, and that doctor serves as your main point of contact for healthcare. If you need to see a specialist, you’ll usually need a referral first, though certain preventive services like mammogram screenings don’t require one.
You generally must use doctors and hospitals within your plan’s network. If you go outside the network, you could be responsible for the full cost, with a few exceptions: emergency care, urgent care when you’re traveling, and dialysis when you’re temporarily out of your plan’s service area. Some plans offer a “point of service” option that lets you see out-of-network providers for a higher cost, but this isn’t standard.
Prior authorization is another common feature. For certain treatments or procedures, your plan needs to approve them before you receive care. Once a plan gives you prior approval, that approval stays valid for as long as the treatment is medically necessary. If you switch to a new plan while receiving ongoing treatment, you have at least 90 days before the new plan can require you to get a fresh approval.
Who Runs These Plans
Your Medicaid HMO plan is managed by a private insurance company that contracts with your state. Some of the biggest players in this space are Centene, Elevance Health (formerly Anthem), UnitedHealthcare, Amerigroup, and WellCare. These five companies alone enroll roughly 39 percent of all Medicaid managed care members nationwide. You’ll also see regional players and familiar names like Blue Cross Blue Shield, Molina, and Kaiser Permanente operating Medicaid managed care plans in certain states.
Even though a private company runs the plan, the benefits you receive are still determined by your state’s Medicaid program. The insurance company is essentially a middleman: the state sets the rules about what’s covered, and the company builds a provider network and coordinates your care within those rules.
How to Tell if Your Medicaid Is an HMO
Your insurance card is the quickest way to check. If you’re in a Medicaid managed care plan, your card will display the logo of the private insurance company managing your coverage (Molina, UnitedHealthcare, Centene, etc.) alongside your state’s Medicaid branding. In Virginia, for example, managed care members receive a card with both the health plan logo and the state’s Cardinal Care logo. Fee-for-service Medicaid members get a card with only the state Medicaid branding and no private insurer listed.
You can also call the phone number on the back of your card or log into your state’s Medicaid portal. Your plan documents will specify whether you’re in a managed care (HMO) plan or traditional fee-for-service Medicaid.
Fee-for-Service vs. Managed Care Medicaid
The key tradeoff between the two models comes down to flexibility versus coordination. Fee-for-service Medicaid lets you see any provider who accepts Medicaid without needing referrals, but there’s no built-in care coordination. You’re responsible for managing your own appointments and making sure different providers communicate with each other. Fee-for-service Medicaid also tends to pay doctors lower rates than other insurance, which can make it harder to find providers willing to see you.
Managed care Medicaid restricts your choices to a network but offers more structured support. Your plan is responsible for coordinating your care, tracking your health outcomes, and connecting you with services you need. States also hold managed care plans accountable through annual quality reviews conducted by independent organizations. These reviews evaluate whether plans are providing timely access to care and meeting quality benchmarks.
In 2024, the federal government finalized new rules requiring Medicaid managed care plans to participate in a quality rating system, similar to the star ratings used for Medicare Advantage plans. This is designed to make it easier for enrollees to compare plans and for states to identify which ones are delivering better outcomes.
Why Most States Use the HMO Model
States shifted toward managed care because it makes costs more predictable. Instead of paying for each individual doctor visit or hospital stay (which can spike unpredictably), the state pays a flat monthly rate per enrollee. The managed care company then assumes the financial risk of keeping costs within that budget. This creates an incentive for the plan to invest in preventive care and catch health problems early, since treating advanced conditions is more expensive.
The shift has been dramatic. In 2010, a smaller share of Medicaid beneficiaries were in managed care. By 2022, 62.2 percent of all Medicaid beneficiaries had at least one month of enrollment in a comprehensive managed care plan, and that number has continued climbing. Today, managed care is the dominant delivery system for Medicaid across the country, and for most people who qualify, their Medicaid coverage will come through an HMO-style plan.