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Medicare HMO vs PPO Plans

A Medicare Health Maintenance Organization (HMO) and a Medicare Preferred Provider Organization (PPO) are both private managed health care systems paid by Medicare to provide quality healthcare to members at a low cost. When deciding what insurance policy to join, it is important to understand the fundamental similarities and differences of these two policies to ensure the choice reflects the desired costs and health care needs of your family.

  1. Function

    • Both of these managed health care systems are private companies that strive to provide access to top quality professionals at a low cost. These reduced health care costs encourage and stress the importance of early medical treatment and preventative care. Medicare HMO and PPO plans accept all people with Medicare unless the member doesn't meet the following requirements: permanent resident in the plan's service area, complete the required paperwork agreeing to the terms and rules of the plan, and the member cannot have ESRD, end stage renal disease, while applying.

    HMO Health Needs

    • Individuals with Medicare and who enroll in HMOs are limited to only receive medical care from the network of doctors in the HMO policy. HMOs have specific coverage rules, but HMOs are required to cover and provide all services that Medicare covers. Members of HMOs are required to select a primary care physician, referred to as a PCP, when enrolling in the organization. This PCP is the initial contact for every medical need, and their referral is required before visiting a specialist within the HMO network.

    PPO Health Needs

    • Medicare PPOs offer greater variety and flexibility in choosing doctors, hospitals and even specialists than the standard HMO. Furthermore, if an individual needs medical attention from a doctor outside the network, a PPO plan will cover up to 80 percent of the medical bill while patients with a HMO policy are required to pick up the entire bill. Also, Medicare PPO usually provide additional benefits, such as dental and vision care.

    HMO Costs

    • HMOs are less costly than PPOs. If the necessary medical care remains in the provided network, then members are only required to pay a small fixed monthly cost plus a minimal co-payment for each doctor visit.

    PPO Costs

    • Due to the larger network of providers and benefits, members incur more out of pocket expenses with a PPO plan. Most PPOs charge a slightly higher co-payment and some even require a deductible payment before the insurance covers the bill.

    Considerations

    • The benefits and cost structures not only vary between HMOs and PPO plans, but also between specific HMOs compared to other HMOs as is the same with different PPO plans. Extensive research may be required to find the perfect plan that matches and reflects the health needs and desired costs of the future member.

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