Open enrollment starts November 1st thru December 15th for individual and family plans. The purpose of this article is to provide an overview of the difference between HMO and PPO plans.
Health Maintenance Organizations (HMO)
An HMO has its own network of providers, hospitals, and other providers such as Durable Medical Equipment (DME), Physical Therapy (PT), Speech Therapy (ST), etc. You are bonded (assigned) to a Primary Care Physician (PCP) who will help navigate your care. If you need to see a specialist, a referral from your PCP is required in most cases.
Scenario: You see your PCP for an annual check-up and mention your concern regarding pain in your finger joints. Your PCP will discuss with you the issue and if needed will refer you to an orthopedic specialist within the HMO network. If you have reviewed the bios of the HMO providers, you can recommend a provider you prefer. You cannot self-refer to a physician outside of the HMO network.
The requirement of the PCP is meant to support preventative care and coordination of care. The PCP will help determine if specialty care is necessary and track chronic conditions such as diabetes for follow up. Your PCP will send reminders regarding yearly preventative tests such as mammograms and colonoscopies.
In addition, because your care is all within the HMO network, your information is managed in one Electronic Health Record (EHR) system. This makes coordination of care more efficient. Whether you see your PCP, dermatologist, or orthopedic specialists, they all have access to your records for total care.
HMO’s care is only covered if you see a provider within the HMO network. Where it can get a bit confusing is HMO’s do contract with providers outside of the HMO network. These provider groups may be referenced in the online directory. It is important to remember, as a subscriber, you cannot seek care from these provider groups unless referred.
How does this work if you are changing from a PPO to an HMO?
Scenario: You have been seeing a retina specialist who has been a part of your care plan for your condition. You trust this provider and would like to continue seeing this specialist. If you change plans and choose an HMO, you may not be able to see this provider. Your HMO PCP will likely direct, you for care to the retina specialist in the HMO network. You can make a request to see the provider you had seen but this would be considered out of network and you would have to self-pay. If the HMO is contracted (in-network) with the group/provider, you could be referred to this provider, but an HMO PCP will typically refer within the HMO network first.
Advantages of an HMO
• Lower costs: copays, deductible, and coinsurance
• Preventative care and care coordination between your providers
• Most services are all in one medical office building
Why Choose an HMO?
• Limited budget and need affordable options
• Preventative care is essential to you
• You don’t mind being limited to the providers within that HMO network
Preferred Provider Organization (PPO)
A PPO is a managed care plan that allows more options when choosing a PCP or specialty provider. There are benefits of the plan for coverage for in-network providers and options for coverage if you choose to go out of network
Example: (assuming deductible met)
In network provider your copay is $50 with 20% co-insurance
- Specialist visit is $500
- You pay: $150.00
- 20% of $500 is $100 plus $50 copay
Out of network provider your copay is $75 with a 40% co-insurance
- Specialist visit is $500
- You pay: $275.00
- 40% of $500 is $200 plus $75 copay
PPO’s are like an HMO in that they also have a network of providers to allow for cost savings but provide more flexibility should you choose a provider out of network. You may also go to this provider without seeking care from your PCP.
PPO’s can generally be more expensive than an HMO resulting in higher monthly premiums
Advantages of a PPO
• A larger network of options for choosing a provider
• Options for coverage of care when you go out of network
• No additional appointment with a PCP required
HMO’s and PPO’s are managed care networks that both offer a network of providers. These providers are contracted with the insurance companies to offer discounts for care in exchange for care for these insurance company’s subscribers. The savings is for the insurance companies but also for you as the consumer. Discounts can result in lower premiums, deductibles, and copays.
What’s Best for You?
Evaluate your current situation to confirm which plan is best for you and your family’s ongoing healthcare needs.
If you are considering a plan with no outstanding health concerns, it comes down to thinking through cost versus flexibility to choose your provider and out of network costs. Emergency care is covered regardless of an HMO vs. PPO.
To assist in decision making, review the quick guide:
| Factor | HMO | PPO |
| Referrals | Referral is required to see a specialist | Not required |
| Cost | Lower premiums, out of pocket costs. This may include a deductible | Higher premiums, out of pocket costs. Includes deductibles |
| Network | In-network only, Emergencies are covered. There may be contracts with a provider not part of HMO network, but a referral would be required | Ability to see providers in or out of network. Be aware of higher cost for out of network |
| Care Coordination | Health care data is maintained in one Electronic Healthcare System (EHR) providing one view of total health care needs with HMO network | Health care data is not shared via one Electronic Healthcare System (EHR) amongst providers |
| Primary Care Physician | Required – navigate care, monitor chronic conditions and preventative care | Not required |
For more information on open enrollment: Healthcare.gov 2020 Open Enrollment