HMO vs. PPO

Two of the more popular kinds of Medicare Advantage Plans include Health Maintenance Organization (HMO) plans and Preferred Provider Organization (PPO) plans. Generally speaking, the difference between HMO and PPO plans includes the size of the plan network, the ability to see specialists, plan costs, and coverage for out-of-network service.

In most HMOs, you can only go to doctors, other health care providers, or hospitals in the plan’s network, except in an urgent or emergency situation. HMO plans typically have lower monthly premiums and you can expect to pay less for out-of-pocket medical services. You may also need to get a referral from your primary care doctor for tests or to see other doctors or specialists.

PPO plans provide more flexibility when picking a doctor or hospital. For example, you are not required to select a primary care doctor. They also feature a network of providers, but there are fewer restrictions on seeing non-network providers. In addition, your PPO insurance will pay if you see a non-network provider, although it may be at a lower rate. Thus, you will have to pay a higher fee if you go out of your network.

Additionally, Private-Fee-for-Service (PFFS) plans are also Medicare Advantage plans, and generally have no network or a very small network. The company will allow any doctor to bill the plan as long as they agree to the plan’s terms and conditions upfront. This puts the burden on you to ask your providers whether they will accept the plan before you seek medical services.

Below is a chart outlining the differences between an HMO and a PPO plan.

	HMO	PPO
Do I need to designate a Primary Care Physician (PCP)?	YES, With most HMO plans, all of your healthcare services will be coordinated between you and your designated Primary Care Physician (PCP).	NO, A PPO plan does not require you to select a PCP. You can receive care from any doctor you choose, however you will save more money by choosing a doctor, specialist or hospital that is within your network.
Is a referral needed?	YES, As an example, with an HMO, if you have severe allergies and need to see an allergist, you will first schedule a visit with your PCP. Your doctor will then provide you with a referral for an in-network specialist.	NO, PPO plans do not require you to get a referral in order to see a specialist.
If I have a doctor or specialist who is out-of-network, will I still be able to see them and have my care covered?	NO, HMOs don’t offer coverage for care from an out-of-network physician, hospital or facility except in the case of a true medical emergency.	YES, With a PPO, you have the flexibility to visit providers, hospitals and facilities outside of your network. Keep in mind that visiting an out-of-network provider includes a higher fee and a separate deductible.
Will I have to file a claim?	NO, Since HMOs only allow you to see in-network providers, it’s likely you’ll never have to file a claim. This is because your insurance company pays the provider directly.	YES, In some cases with a PPO, you will have to pay a doctor for services directly and then file a claim to get reimbursed. This is most common when you seek a service from an out-of-network provider.
How much will it cost?	Lower Cost HMO plans typically have lower monthly premiums and you can expect to pay less for out-of-pocket medical services. Both plans work on a combination of deductibles, cost-share or co-insurance, and co-pays to pay for services.	Higher Cost PPOs tend to have higher monthly premiums in exchange for the flexibility to choose providers both in- and out-of-network and without a referral. Out-of-pocket medical costs can also run higher with a PPO plan.