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PPO vs. HMO

PPO vs. HMO

At a Glance

HMO makes healthcare more affordable but can be restrictive in terms of the physicians you can visit. A PPO plan is more expensive but offers greater flexibility.

United States healthcare is administered by certain regulatory processes that determine how insurance, doctors and patients are covered. The coverage is by network and provides coverage for individuals depending on income. Private health coverage is broken down into different consumer-driven and managed care. Two types of managed care are Preferred Provider Organization (PPO) and Health Maintenance Organization (HMO). This is the network between the client and the provider of services. These are the two most commonly used.

Basic Differences

Pictured at top: Health Insurance: Navigating Traps and Gaps

HMO was put into place to cover employers that have more than 25 employees with this health care option. It is a pre-paid plan that covers many with low incomes to be the in-between for the patient and the physician. HMOs are networks that physicians of various services take part in order to get more business into their office. This does not make the managed care any different, other than restrictions on physicians they can see. PPO covers a greater portion of the costs of care as long as the coverage plan is paid. Normally these are more expensive but provide more flexibility in service.

Network

HMOs provide a list of physicians that insurance covers for their network but there are some restrictions on the kind of patient care and in seeing a physician. In order for one to be qualified for this care, one would have to select a primary physician to handle all services. If there is a service that requires a different physician, the patient requires a referral from their primary care giver. PPOs on the other hand do not have these restrictions and allows the patient to go to any care giver as long as they are in the network. For each one, seeing out of network physicians requires out of pocket payment.

Payment Arrangements

Both HMO and PPO require co-payments for services. With HMO care, the patient is responsible for the co-payment that covers prescriptions, doctor visits and some services during checkups. PPO care also leaves the patient responsible for their co-payments, or it remains part of the deductible from payments that are made into the care. Going out of network for HMO requires full payment from the patient as well as with PPO care, but PPO covers a percentage of most of the out of network visits or compensates the patient when paying out of pocket. An appeal would need to be filed to recieve that compensation.

Emergency Care

Under HMO coverage, the conditions covered depend on the response from the insurer. This requires some process that gives the insurer some time to determine if the health issue is serious enough to be covered or not. Most of the time the insurer will check to confirm, ‘in the network coverage. Even emergency visits will require co-pay under this coverage. The same process of contacting your primary physician for a referral is required with this plan. Everything goes through them. PPO offers emergency coverage quickly and with most every emergency room. There is no co=pay required for this service. For all emergencies however, these violations can be appealed after. Emergency situations should be priority anyway, regardless of coverage.

This report was compiled using public information and is not intended to replace professional financial or medical advice.