HMO vs PPO

HMOs and PPOs have different rules governing medical appointments.

Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs) are both managed health care plans that are widely available. Both plans focus on offering health care to their members, but they also differ in key ways. Large differences arise when examining various facets of HMOs and PPOs, such as cost, access, restrictions and management.

Cost

Preferred Provider Organizations (PPOs) are typically quite a bit more expensive than Health Maintenance Organizations (HMOs.) PPOs have deductibles that often range from $500 to $2,000. The monthly premiums for PPOs also will be much higher than the monthly premiums for HMOs. HMOs, however, usually carry a zero deductible and include very low co-payments for doctor visits. A typical HMO co-payment will be $5-10 while a typical PPO co-payment often can be $20 or $30, or even more depending on the plan.

Access to Doctors

HMOs and PPOs differ greatly in terms of access to physicians. With an HMO, there is a pre-approved list of doctors that are "in-network" and must be used at all times. If a patient goes to a doctor that is not on the list, there will be no coverage provided by the HMO at all. With a PPO, there is much wider access to doctors. PPOs still come with a pre-approved list of "in network" doctors, and patients seeing these doctors will be fully covered by their insurance plan (although they will still need to pay their co-pay at the time of the visit.) However, patients still can receive some coverage when visiting any physician. PPOs will cover the services of out-of-network doctors up to a certain percent of their total cost or up to a pre-set maximum dollar amount per service, based on the rates of in-network doctors.

PCP and Referrals

While all plans will encourage patients to have a regular primary care physician (PCP), HMOs require that this be the case to receive benefits. Without a PCP, a patient will not be able to see a doctor or receive coverage. Additionally, to see a specialist, a patient with an HMO will need a referral from their PCP. PPOs, however, do not require that their customers register with a PCP. Patients can make appointments and see a specialist on their own without having to get referrals or go through their PCP.

Alternative Doctors

If a patient is interested in seeing an alternative practitioner, such as an acupuncturist or a chiropractor, they will almost always be unable to do so with an HMO. HMOs are more restrictive in their coverage and these alternative practitioners will not be included. While individual PPOs can vary, these insurance plans typically will provide at least partial coverage when seeking out alternative medicine.

Other Services

With an HMO, a referral is needed for an X-ray.

Just like they do with specialists, people with HMO plans will need referrals from their PCP to obtain other services such as X-rays, shots and bloodwork. People with PPOs, however, can go to a lab and have these services performed without a specific referral. For larger and more expensive services such as MRIs, however, referrals will often be required by both plans, although individual PPOs will vary.

Insurance Claims

With an HMO, patients will most likely never have to complete any paperwork regarding claims. All paperwork is filed by the doctor and the insurance company after each visit. Physicians are not allowed to charge HMO patients directly. With a PPO, paperwork can vary. If a patient sees a doctor who is in the network, most likely he will not need to fill out any paperwork. If a patient sees a doctor who is out of network, however, she may sometimes be required to pay in full and then file a claim for reimbursement from her insurance company.

References

• Financial Web: HMO vs. PPO
• Insurelane: HMOs vs. PPOs