HMO Vs. PPO: What You Need To Know

Medicare can be a confusing subject matter with many special terms and different acronyms. Physicians that have been filing claims for years can struggle to understand all of the policies and procedures, so it’s no surprise patients like you need help, too. We want you to feel ready to tackle your Medicare plans and know everything you need to know. 


When first signing up for Medicare, you may wonder about the terms Health Maintenance Organization (HMO) and Preferred Provider Organization (PPO) and speculate what they are and how they differ. For starters, HMO and PPO plans are both Medicare Advantage Plans. Choosing one plan over the other will affect your costs and your plan’s network options. These are actually the two biggest differences between them. 


1. Lower Vs. Higher Costs


When it comes to saving money, an HMO plan is most often the cheaper option. However, this also means less network options, which we will explain more below. If you don’t need a lot of health care throughout the year, except for immunizations and your wellness exam every 12 months, then an HMO plan may be right for you. One of the reasons this is a cost-effective option is HMO plans have physicians, hospitals and healthcare providers that have all agreed to a set payment amount meaning a lower monthly premium. 


Coinsurance and copays are also usually more affordable with an HMO plan. Even though HMO plans are often the least expensive option in regards to monthly premiums, they don’t cover out-of-network providers, which can be very costly if you want to see a specific doctor that isn’t in-network. This can be difficult for patients when a doctor they’ve been going to for many years and one that already knows their medical history, isn’t part of the provider network of their new HMO plan. Though, out-of-pocket costs can be higher with a PPO plan. 


2. Network Options


While HMO plans may look better when it comes to cost, more network options and flexibility is available with PPO plans. For example, unlike HMO plans, you don’t need a referral from your primary care physician (PCP) to see a healthcare specialist. This means when you have an HMO plan, you have to first schedule an appointment with your PCP and then they will refer you to a specialist that is in-network with your plan. 


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