Q:

What are the differences between HMO and PPO insurance plans?

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Quick Answer

A health maintenance organization insurance plan may require an individual to have a primary doctor, and an the individual must acquire referrals from his primary doctor before receiving other services, states Blue Cross Blue Shield. A preferred provider organization allows an individual to seek services inside the insurance plan's network of preferred health care providers without a referral.

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Full Answer

An HMO and PPO are similar in that both offer access to a network of physicians, hospitals and other health care providers, according to Medical Mutual. However, an HMO may have lower premiums than a PPO plan, and HMOs typically do not require a deductible, whereas PPOs commonly have a deductible. An HMO also does not cover services received outside of the preferred network, but a PPO may cover part of the expenses incurred while receiving services from an out-of-network provider. However, there is better coverage and smaller copays for health services provided in-network.

Another difference between HMO and PPO plans is that consumers on HMO plans must obtain a referral from their primary care physician in order to see a specialist, while a consumer on a PPO plan can go straight to a specialist himself. There is an exception to the referral requirement for women who need to see an obstetrician/gynecologist for routine visits and obstetrical care, states Blue Cross Blue Shield.

Due to the fact that HMOs only allow individuals to receive services from within the preferred network, individuals typically do not have to file claims for coverage because the service provider directly pays the provider for the services, states Humana. With a PPO, an individual may need to file a claim to receive reimbursement for payments made out of pocket for services provided outside the preferred network.

HMO and PPO plans also differ in their monthly cost. An HMO generally comes with a lower premium, but it also gives consumers limited options in choosing their medical services. A PPO may have a higher premium, but more options are available, which can result in a lower out-of-pocket cost overall, states Blue Cross Blue Shield.

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