HMO vs PPO

HMO vs PPO is one better than the other? What do these groups of letters even refer to? These abbreviations refer to the type of plan. HMO stands for Health Maintenance Organization and PPO stands for Preferred Provider Organization. These are not the only types of plans, but they are the most common.

HMO

HMO’s have a network of doctors, hospitals and other healthcare providers who provide their services for a specific payment, which allows the HMO to maintain costs for its members. Enrollees in an HMO plan will need to select a provider in their plans network, and typically will not have out of network coverage, except in the case of emergencies. This means that if an enrollee only wishes to see a certain provider, and that provider is not contracted with the plan, then the only way for them to see that provider would be to pay the full cash price. Their insurance plan would not cover the cost of the appointment or fill orders by the out of network doctor. HMO’s, through keeping their network closed, are able to keep better control of the costs and through that offer lower copays and higher benefit amounts to it’s plan members.

While these plans do offer many times lower costs and higher benefit amounts, they also typically require a referral. Not all HMO plans will require a referral from your Primary Physician to see a specialist, but most do. When HMOs first came around they were extremely inefficient we were extremely inefficient, but over the years the technology has streamlined. Some companies get a referral processed anywhere from 0-3 days others may take a week. If you are choosing and HMO plan because of the cost and benefits benefits the two most important considerations will be the company and the primary care doctor you choose. There are some plans that are inefficient with there processes, but we have also seen many primary care facilities cause the delays in processing referrals and other procedures. If you are interested in a Medicare Advantage plan that is an HMO please consider the Value Based Care Providers in your area.

PPO

PPO, again, stands for Preferred Provider Organization and they offer a network of healthcare providers to use for your medical care at a certain rate. Typically out of pocket costs will be higher with these plans, and any allowances for extra benefits would typically be lower than the average HMO plan. However, what a PPO plan offers is a bit more freedom. PPO plans do not require referrals to see specialists and often offer out of network benefits as well. Not all PPO plans offer out of network benefits, but many do. This is often a big point for agents and can be misleading. Out of network benefits are not a new feature on PPO plans, but there is still a lot of confusion about how they work. The benefit may be covered/available on your plan, but to see the out of network doctor they must agree to bill the plans out of network benefits. There is no guarantee to see any doctor. Each doctor can choose to bill out of network or deny the request.

If you do take advantage of the out of network benefits and the provider bills the plan, it is important to be aware of the out of pocket costs. Especially take note of the annual maximum out of pocket limit. Using out of network benefits can cause this rate to increase dramatically, sometimes double. In the plan’s summary of benefits all of these limits and copays will be listed. First, the in network provider costs will be listed and then the out of network benefits will be listed to compare. Whether HMO or PPO there is still the possibility of major services requiring prior authorization.

Conclusion

There is not best plan when comparing HMO to PPO. For some, the lower costs and additional benefits with an HMO plan will make a world of difference in being able to access their healthcare. Others, are not willing to be restricted by referrals or any other limitations in network and will happily pay a higher copay to keep that freedom with a PPO. Whether HMO or PPO there is still the possibility of major services requiring prior authorization. If you are unsure and need help comparing the two, give us a call or fill out the form on our ‘contact’ page!