If insurance enrollment is on the horizon at your office, you may be wondering exactly which type is best. When comparing HMO vs PPO, and understanding the difference between HMO and PPO, it’s important to understand what each plan is. You might even think that an HMO and a PPO are basically the same thing and simply decide to choose the cheapest option. However, there are several key differences between these two common insurance plans.
A Health Maintenance Organization (HMO) allows the user access to doctors and hospitals within a specified network. Healthcare providers who partner with HMOs must meet specific quality standards and offer their services at a lower rate for plan members. HMOs typically have small networks and only cover care performed by in-network providers. Additionally, these plans typically have a cap on how many visits, tests and treatments a patient can receive each year.
People who choose an HMO insurance plan must choose a primary care physician. The PCP (Primary Care Provider) manages all the patient’s healthcare needs, meaning he or she decides when the patient should see a specialist or undergo diagnostic tests. Patients who choose out-of-network PCPs or who visit specialists without a referral from their PCP must pay out of pocket. HMO networks also decide which pharmacies patients can use. There are exceptions to these rules; for example, a person can make his or her own routine OB/GYN appointment without a referral, and emergency rooms must bill as in-network (although the providers themselves do not need to).
HMO plans are usually the more affordable choice. They typically have lower premiums and no or very low deductibles. Patients pay copays for visits, diagnostic tests and screenings, and prescriptions. Prices vary depending on the provider and the chosen plan. In 2018, the average HMO user paid $230 per month. About 14 percent of people choose these plans through their employers.
Like an HMO, a Preferred Provider Organization (PPO) uses a network of providers to offer healthcare. However, PPOs typically have larger networks and do not require the insured to see a PCP before visiting specialists. They also allow people to fill prescriptions at nearly any pharmacy. PPOs do provide some coverage when patients see out-of-network providers but do not cover the cost entirely. The patient is responsible for any cost over the PPO’s coverage.
PPOs are more flexible, but they are also more expensive. In addition to higher premiums, PPOs require users to pay a deductible before covering medical expenses. However, these plans usually have an out-of-pocket maximum, which means the insurer pays all additional costs once the patient spends a certain amount. In 2018, the typical PPO user paid a deductible of slightly more than $1000 and about $251 per month.
Choosing the right plan depends on the purchaser’s needs. Someone who is in generally good health, does not see many specialists and tends to stick close to home is likely to save money by choosing an HMO plan. However, a person who visits specialists often or who travels regularly will probably need a PPO to avoid higher out-of-pocket costs. When choosing an insurance plan, it is important either to choose one your current doctor is already a member of or to choose a new and reputable healthcare provider who takes several types of insurance. Practices, such as DOCTORS UNITED works with all insurances including Medicare and Medicaid – as well as all their sub-products.