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Month: June 2022

HMO VS PPO Medicare Advantage Plans

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Understanding HMOs

What is the difference between a Medicare Advantage PPO plan and a Medicare Advantage HMO plan?

HMO stands for Health Maintenence Organization and is a type of insurance structure that limits coverage to specific contracted medical care providers and hospitals. These are known as in-network providers or providers in the health insurance plan’s network.

Each HMO member has to have a primary care doctor (PCP) that coordinates their care. The primary care doctor will be the member’s first point of contact, and they will determine when a specialist is needed. The primary care doctor will then refer the client to the appropriate in-network specialist. Only services through doctors and other providers who are under contract with the HMO will be covered, unless it is authorized in advance by the HMO plan.

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Usually, HMOs have the lowest cost-sharing for beneficiaries, making it a good option for those cost-conscious and willing to stick with the network. Some also like the advantage of having a primary care doctor coordinate and manage their care.

In case of emergency, you are allowed to go to the nearest emergency room, even if the hospital is not in-network.

What is a PPO plan?

PPO stands for Preferred Provider Organization. With PPO plans, you are not limited to specific in-network doctors. You are also not required to choose a Primary Care Doctor and can see specialists without first obtaining a referral.  PPOs are structured so that in-network medical providers bill at a lower rate than a provider who is not contracted with the plan. Therefore, you will pay a lower cost share if you go to a preferred provider or an in-network provider. However, this is not a requirement, and many choose PPO plans to give them the flexibility to choose an out-of-network provider if the need arises.

How do max out-of-pockets work?

All Medicare Advantage plans, regardless if they are an HMO or a PPO have a Max Out of Pocket or MOOP for short. An out-of-pocket maximum is a cap on the amount of money the member is required to share for covered health care services in a plan year. For this reason, some health insurance plans refer to MOOP as the “out-of-pocket limit”. If the member meets the MOOP limit, the plan will pay 100% of all subsequent covered health care costs for the duration of the plan year. An HMO’s out-of-pocket max will only be for healthcare services provided by in-network providers. All out-of-network services will be denied by the HMO, leaving the member with 100% of the costs without limitations.
For Medicare Advantage PPOs, there will generally be an in-network max, as well as a separate out-of-network max. Services provided by in-network doctors will go towards the member’s in-network MOOP. Out-of-network service will go towards the member’s out-of-network max.
***It is crucial to understand that with an HMO plan if one goes out of network, there is no cap on what their medical expenses will be.

In conclusion

Like most things in life, they both come with pros and cons. HMOs generally have lower copays and cost-share expenses. PPOs however, give members more flexibility and do not require plan members to obtain referrals. PPOs give one the ability to travel throughout the US without worrying about how they will receive medical care. In addition, PPOs give an additional measure of peace of mind. In the event of a serious illness, the member will be covered by insurance to receive the best possible care anywhere in the country.  It is important to note that although one can travel and see out-of-network providers, it will come at a much greater cost-share.
Depending on your personal needs and preferences we can help you decide which best suits your needs.

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Proudly representing 15 carriers. CMS Disclaimer: We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.