HMO vs PPO: Whatʼs the Difference Between HMO and PPO Plans? (2024)

FAQs

HMO vs PPO: Whatʼs the Difference Between HMO and PPO Plans? ›

HMO plans typically have lower monthly premiums. You can also expect to pay less out of pocket. PPOs tend to have higher monthly premiums in exchange for the flexibility to use providers both in and out of network without a referral.

Compared to PPOs, HMOs cost less. However, PPOs generally offer greater flexibility in seeing specialists, have larger networks than HMOs, and offer some out-of-network coverage.

Disadvantages of PPO plans

Typically higher monthly premiums and out-of-pocket costs than for HMO plans. More responsibility for managing and coordinating your own care without a primary care doctor.

Doctors often prefer PPOs because they offer greater reimbursem*nt rates compared to HMOs and have less administrative paperwork. Is a PPO a good thing? For many, a PPO's flexibility and coverage make it a favorable choice, but it comes with higher premiums.

HMO plans frequently need primary care physicians to refer patients and have constrained provider networks, which may frustrate some physicians. Yet, HMO plans often have lower consumer out-of-pocket payments, which may appeal to physicians who wish to provide appropriate care.

HMOs don't offer coverage for care from out-of-network healthcare providers. The only exception is for true medical emergencies. With a PPO, you have the flexibility to visit providers outside of your network. However, visiting an out-of-network provider will include a higher fee and a separate deductible.

HMO plans are generally less expensive than PPO plans, with lower monthly payments, making them ideal if your favorite doctors are already in the network, or if you receive most of your care close to home.

Advantages of PPO plans

A PPO plan can be a better choice compared with an HMO if you need flexibility in which health care providers you see. More flexibility to use providers both in-network and out-of-network. You can usually visit specialists without a referral, including out-of-network specialists.

Deductibles: PPO plans usually come with a deductible. This means you pay for care and services until the deductible is met. Then your plan starts sharing costs.

Why do doctors like HMO? ›

The larger networks associated with PPO plans could mean a broader patient base, which can be advantageous for doctors and their practices. On the other hand, some doctors may prefer HMO plans because they often have a simpler billing structure which can reduce administrative overhead.

Each type of plan offers different types of coverage based on cost and networks, so the best plan for you depends on your budget and your doctor preferences. Medicare PPO is a better choice if: Medicare HMO is a better choice if: You are looking for more flexibility in the doctors you see.

Like HMOs, PPOs have a network of doctors and other providers. However, you can choose to see providers who are not in the network. You usually pay a higher cost to see providers who are not in the network.

HMOs are known for their provider networks and lower costs. They are also restrictive and don't cover out-of-network care unless it's an emergency. PPOs offer more flexibility and allow out-of-network care, but that type of care typically comes with a higher cost.

In an HMO there are some disadvantages. The premium that is paid is just enough to cover the costs of doctors in the network. The members are “stuck” to a primary care physician and if managed care plans change, then the member may not be able to continue with the same PCP.

What Are the Benefits of an HMO? The main benefits are cost and quality of care. People who purchase HMO plans benefit from lower premiums than traditional forms of health insurance. This allows insured parties to get a higher quality of care from providers who are contracted with the organization.

HMOs are known for their provider networks and lower costs. They are also restrictive and don't cover out-of-network care unless it's an emergency. PPOs offer more flexibility and allow out-of-network care, but that type of care typically comes with a higher cost.

PPOs are the most common plan type. Forty-seven percent of covered workers are enrolled in PPOs, followed by HDHP/SOs (29%), HMOs (13%), POS plans (10%), and conventional plans (1%) [Figure 5.1]. All of these percentages are similar to the enrollment percentages in 2022.

An HMO is a health maintenance organization. The Department of Managed Health Care (DMHC) oversees all HMOs in California and some other kinds of health plans. An HMO is a kind of health insurance that has a list of providers, such as doctors, medical groups, hospitals, and labs.