Medicare: HMO vs PPOPosted by Medicare Made Clear
Before choosing a Medicare Advantage plan or a Medicare supplemental plan, it’s important to understand the difference between an HMO and a PPO.
A Health Maintenance Organization (HMO) is a type of managed care health plan that requires its members to use only approved health care providers from their in-network list, except in the case of an emergency or for out-of-area urgent care or out-of-area dialysis. Although HMO provider networks tend to offer fewer choices of doctors than a PPO network plan, many HMO members enjoy lower premiums and/or copayments than a PPO member.
Depending on the plan, an HMO may cover health screenings, cancer screening, preventive care, immunizations, laboratory tests, X-rays and other scans, prescribed medications, and surgical treatments. In most cases, prescription drugs are covered in HMO Plans. If you want Medicare prescription drug coverage (Part D), you must join an HMO plan that offers prescription drug coverage.
As an HMO member, you will be required to select a primary care physician from their in-network list. Your primary care physician will coordinate your health care and act as an advocate to help you find the best health care services for your needs. If you need treatment from a specialist, such as a cardiologist or dermatologist, or if you require lab work or diagnostic tests like x-rays, your primary care physician will have to provide you with a referral. If you do not get a referral from your PCP or if you use the services of other health care providers outside of your HMO’s network, the visit may not be covered under your plan and you may be required to pay for all or most of the services. As an HMO plan member, the only charges you should incur for in-network services are copayments.
A PPO or Preferred Provider Organization is another type of managed care health plan. A PPO usually provides a large network of physicians, hospitals and other health care providers — usually much larger than an HMO network. While a PPO is more flexible than an HMO, members may pay higher premiums and make higher out-of-pocket payments to their doctor at an office visit.
A PPO does not require that you have a primary care physician. You also don’t need to get a referral to see a specialist. In-network physicians and other health care providers negotiate discounted rates with the PPO, which usually results in better benefits and lower costs than if you used an out-of-network doctor. Some plans allow you to use out-of-network providers, but you may have to pay more for the visit.
A Medicare PPO plan is a type of Medicare Advantage plan (Part C) offered by a private insurance company. PPO plans usually offer extra benefits than Original Medicare, but you may have to pay extra for these benefits. In most cases, prescription drugs are covered in PPO Plans. If you want Medicare drug coverage, you must join a PPO plan that offers prescription drug coverage. If you join a PPO plan that doesn’t offer prescription drug coverage, you can’t join a Medicare prescription drug plan (Part D). Depending on the PPO plan, you may have to pay a copayment and an annual deductible. You may also have to pay an annual out-of-pocket maximum before your plan starts paying 100 percent.
Make sure you understand each HMO or PPO policy and ask questions if you are unsure about each plan’s benefits and how much you will be required to pay before selecting a plan.
For more information, explore MedicareMadeClear.com or contact the Medicare helpline 24 hours a day, seven days a week at 1-800-MEDICARE (1-800-633-4227), TTY 1-877-486-2048.
Your Medicare Coverage Choices: Medicare.gov
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