What Is the Difference Between a Medicare PPO and HMO?


Quick Answer

The difference between Medicare PPO and HMO plans is that with PPO plans, insured individuals don't have to choose a primary care physician, get prior approval for out-of-network services and deductibles are combined for in-network and out-of-network services. Both plans allow those insured to visit a specialist without a referral.

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What Is the Difference Between a Medicare PPO and HMO?
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Full Answer

Individuals with a Medicare Advantage Plan may choose between a PPO and HMO plan, depending on their personal needs. These types of plans replace Original Medicare, providing a fee-based service rather than the free or low-cost insurance option available to those over 65 or who have certain disabilities.

PPO, or Preferred Provider Organization, plans provide extra flexibility over HMO plans. When individuals choose PPO plans, they pay less for seeing doctors, health care providers and hospitals within the PPO's network, but aren't precluded from coverage on these visits. While referrals aren't required for out-of-network providers, individuals with PPO plans are responsible for scheduling appointments and paying the extra fees incurred. Deductibles between in-network and out-of-network providers are combined, making these plans less costly in some cases.

HMO, or Health Maintenance Organization, plans require individuals to choose a primary care physician who coordinates all aspects of care. Though referrals for specialists aren't needed with this plan, referrals often help patients see a specialist in a more timely manner. Prior authorization is required for many services, with many HMOs refusing to pay for unauthorized services. Though some HMO plans have point-of-service features that allow individuals to see out-of-network providers for a higher fee, these services have separate deductible requirements with most HMO plans.

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