Medicare is complex, and it takes some real effort to understand all of the nuances. Medicare is comprised of many concepts which are not commonly familiar to most seniors – and even insurance professionals are sometimes stymied by the program. While we are not going to attempt to explain all of the terms and programs today, we are going to start with one aspect of the system – PPO and HMO plans.

PPOs are Preferred Provider Organizations, and HMOs are Health Maintenance Organizations. At some point, you’ve been asked to choose between these two formats – and you may think that they are very different. This blog is to explain the differences, benefits, and implications around these two insurance structures.

Similarities Between PPOs and HMOs

Both a PPO and an HMO will provide dependable and quality healthcare coverage for seniors. They also have several things in common.

PPO and HMO plans are both available through private insurance programs.
Both will fulfill Medicare Part A and Part B requirements.
PPOs and HMOs generally utilize localized provider networks that require you to reside within the plan’s service area.
Plans may include prescription drug coverage, although some do not. This benefit is dependent on the plan you choose.

Differences Between PPO and HMO

Although these programs have many similarities, they actually differ in ways that may be significant to your care. Here are some points to consider.

Cost of Coverage: PPO plans cost more than HMO plans. PPOs have more expensive premiums and require higher deductibles. HMO monthly premiums are more affordable, and the plan may even waive the need for a deductible. If a deductible is present, it is typically fairly low.
Primary Care Physicians: As you may expect, the lower the cost, the less choice is made available. PPO plans may cost more, but they allow you to choose within the network without designating a single primary care physician (PCP). Plan members can also call and visit a specialist without a referral from a primary care doctor. Under an HMO plan, a PCP must be designated ahead of time, and the member must visit their PCP first when an illness or injury occurs. If the PCP can’t resolve the situation, they will refer you to a specialist who can help. Those under an HMO plan are not allowed to go directly to a specialist even if they know what they need. For instance, if an individual has allergies, they will have to go to their PCP for a referral to an allergy specialist or the care will not be covered.
Networks: Plan networks lower healthcare costs by allowing insurance companies to negotiate discounts within the PCP network, making doctor appointments and procedures more affordable for members. While both PPOs and HMOs utilize networks, they approach them differently. PPOs typically have more extensive networks and include a more diverse choice of PCPs, specialists and hospital choice. HMOs tend to offer fewer overall options within their networks.
Out-of-Network Service: Sometimes circumstances dictate that you can’t make it to your primary care physician and you must seek medical care. PPOs will usually offer some way to be reimbursed, at least partially, for out-of-network costs. HMOs, however, are generally much more stringent about out-of-network services and won’t cover claims filed by out-of-network providers.

Do Physician Prefer One Plan Over Another?

Medical practitioners are paid based upon the type of insurance you have – and so they do not mind which insurance plan you choose. Patients with PPOs are not treated any better than those who have an HMO. Senior citizens should choose the right plan for them, based upon their budget, healthcare needs, and preferences.

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