How Does a PPO Insurance Company Compare to an HMO?


Quick Answer

A Health Maintenance Organization insurance plan generally only provides coverage when members use health care providers within its network, whereas members of a Preferred Provider Organization have more leeway in choosing health care providers, as Healthcare.gov explains. However, PPOs usually have more out-of-pocket costs than HMOs, according to WebMD.

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Full Answer

Those enrolled in an HMO choose a primary care physician from within the plan's network to manage all of the patient's health care needs, according to WebMD. If a patient needs to see a specialist, then the primary care physician must provide a referral for the insurance to cover the visit.

In an HMO, patients must pay most or all of the bill for visits to health care providers outside the network, according to About.com. Those in a PPO do not need to select a primary care physician and can see specialists within the plan's network without a referral, explains WebMD. Additionally, while PPOs may cover a percentage of the cost for visits to out-of-network doctors, patients must first pay for the visits and then file a claim for reimbursement.

When dealing with in-network health care providers, patients in an HMO plan encounter little billing or paperwork, reports WebMD. They usually pay no deductible, but they must make copayments for various types of health care. Those in PPOs have more freedom in their choice of health care providers, but they face more paperwork. Patients in a PPO also often must pay a deductible as well as higher premiums, copayments and coinsurance.

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