What’s the difference between PPO and HMO in Medicare?
Understanding the full spectrum of Medicare concepts is hard. With so many acronyms, caveats and (seemingly) abstract ideas, even seasoned health insurance professionals get confused by the dizzying array of Medicare terms and information.
We get many questions about PPOs (Preferred Provider Organization) and HMOs (Health Maintenance Organization). What these acronyms stand for, what they mean, which one is better and why, are issues we address daily.
Even if you don’t know anything about what PPOs and HMOs are, you’ve probably deduced they’re very different. Here, we’ll demystify these plans and answer, once and for all, what is the difference between PPO and HMO in Medicare?
First, how are PPO and HMO the same?
Both plans are available through private insurance and will fulfill Medicare Part A and Part B requirements. PPOs and HMOs typically use provider networks and require you to live within the plan’s service area. These plans may or may not include prescription drug coverage, depending on the plan you pick. But, they both offer the quality, dependable health coverage seniors need.
Now, what is the difference between PPO and HMO in Medicare?
There are many ways PPOs and HMOs compare. Here are the differences that matter.
Difference #1: Cost
PPO plans cost more than HMO plans. They have higher monthly premiums and higher deductibles. HMOs cost less every month and sometimes don’t have any deductibles. When they do, they’re usually relatively low.
Difference #2: Primary care physicians
As the saying goes, you get what you pay for. The higher premium paid in PPO plans means you don’t need to choose a primary care physician (PCP). PPOs also let you seek treatment from specialists without a referral.
With an HMO plan, you’ll have to choose a PCP. When a medical issue comes up for you, you’ll first need to consult with your PCP to diagnose and treat a problem. If your situation isn’t resolved, only then will they give you a referral for a specialist. HMO plans don’t cover specialist treatment without a referral.
Difference #3: Networks
Establishing plan networks is a great way to lower healthcare costs. The idea is the insurance companies negotiate discounts within the network to make doctor visits and procedures more affordable for subscribers.
While PPOs and HMOs both use networks, they do so in a different way. PPOs usually have broader networks and include a better variety of PCPs, specialists and hospitals. HMO plans, on the other hand, offer fewer options within their networks.
Difference # 4: Out-of-network care
Sometimes, things happen, and you need to seek out-of-network care. PPOs will usually offer some reimbursement for these costs, but don’t count on it if you have an HMO plan. HMOs are typically much more strict about out-of-network care and won’t cover claims filed by out-of-network providers.
Do doctors prefer HMO or PPO?
Medical practitioners don’t care which kind of insurance you have, just that you have it. Health insurance companies pay providers what they’re billed according to the plan you select, whether you carry PPO or HMO insurance.
Don’t falsely believe enrolling in an HMO plan will make you less important to your doctors. Pick the best plan for you, not the plan you think might be best for your physician.
If you still need help understanding PPOs and HMOs, we’re here to help. Contact MySeniorHealthPlan today to consult with our experienced Medicare professionals.
image credit: shutterstock/Vitalii Vodolazskyi