HMO vs PPO: Differences, Similarities & Things to Consider (2024)

To choose the right plan for you, consider the price and flexibility you need in a health plan. These are the differences between an HMO and a PPO.

What Are the Differences Between HMO and PPO Plans?

Choosing between an HMO or a PPO health plan doesn't have to be complicated. The main differences between the two are the size of the healthcare provider network, the flexibility of coverage or payment assistance for doctors in network vs out of network, and the monthly payment.

The monthly payment for an HMO plan is lower than for a PPO plan with a comparable deductible and out-of-pocket maximum.

In-depth: HMOs

HMO stands for Health Maintenance Organization. A Health Maintenance Organization is a network of doctors, hospitals and other healthcare providers who agree to provide care at a reduced rate. To keep costs low, HMOs may require you to select a primary care physician (sometimes called a primary care provider or PCP), who can refer you to specialists when needed.

An HMO plan will only pay for care from healthcare providers in the HMO network, except for emergency care, which may be covered out of network. Lab work, such as a blood draw or a urine test, is also limited to one laboratory provider covered by the HMO network.

HMO plans are generally less expensive than PPO plans, with lower monthly payments, making them ideal if your favorite doctors are already in the network, or if you receive most of your care close to home.

In-depth: PPOs

PPO stands for Preferred Provider Organization. Like an HMO, a Preferred Provider Organization is a network of doctors, hospitals and healthcare providers who agree to provide care at a certain rate. Unlike an HMO, you are not limited to providers who are in network, though your copay or out-of-pocket cost for out-of-network visits may be higher than for in-network providers.

Things To Consider When Choosing Between HMO and PPO:

To choose the right plan for you and your family, you may want to consider the following:

Do you need a lower monthly payment?

Compare the monthly cost of the HMO and PPO plans. If you need a lower monthly fee, consider an HMO plan.

Do you stay close to home, or do you travel a lot?

If you travel frequently and are more likely to need care while away from home, especially if you are living with a chronic condition or enjoy high-risk hobbies such as certain sports, you may need a PPO to provide the best coverage for your needs.

If you need a lot of specialist care, say you are managing a rare or chronic condition, you may also prefer the ease of choosing specialists and seeing them right away that you get with a HMO plan.

If you mostly get care in your home city or mostly from your family physician, an HMO is more likely to provide the right coverage for you.

If you already have a doctor you like, does the plan you are considering cover visits with him or her?

While CareFirst's HMO plans have especially wide networks compared to many other HMOs, the PPO plans still offer in network coverage for more healthcare providers. If you would like to keep your doctor, you can determine whether he or she is in network under an HMO plan, a PPO plan or both.

Choosing the right health plan can give you peace of mind, knowing that your insurance plan has your health needs covered.

FAQs

HMO vs PPO: Differences, Similarities & Things to Consider? ›

HMOs don't offer coverage for care from out-of-network healthcare providers. The only exception is for true medical emergencies. With a PPO, you have the flexibility to visit providers outside of your network. However, visiting an out-of-network provider will include a higher fee and a separate deductible.

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What are the similarities and differences between HMO and PPO? ›

HMOs are known for their provider networks and lower costs. They are also restrictive and don't cover out-of-network care unless it's an emergency. PPOs offer more flexibility and allow out-of-network care, but that type of care typically comes with a higher cost.

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Which of the following is a similarity between a HMO and PPO? ›

PPO stands for Preferred Provider Organization. Like an HMO, a Preferred Provider Organization is a network of doctors, hospitals and healthcare providers who agree to provide care at a certain rate.

What is the major difference between HMO and PPO when it comes to the patients financial responsibility? ›

The major difference between HMOs and PPOs when it comes to the patient's financial responsibility is: the patient pays preset copays with HMOs whereas the patient may have to pay a percentage of the cost with a PPO.

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What are the primary differences between the HMO PPO and POS plans? ›

HMOs will not cover out of network care. With a POS, or point-of-service plan, you also have one PCP who manages your access to other doctors. However, you can visit doctors out of network but it will cost more. With a PPO, or preferred provider organization plan, you don't need a referral to seek additional care.

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What is a disadvantage of a PPO plan? ›

What Are Disadvantages of PPO Plans? PPO plans tend to be more expensive than other managed-care options. They typically have higher monthly premiums and out-of-pocket costs, like deductibles.

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What are three disadvantages of HMO? ›

Disadvantages

If you need specialized care, you will need a referral from your primary care physician to an in-network provider.
Must see in-network providers for care-less flexibility than a PPO plan.

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What healthcare plan has characteristics of an HMO and PPO? ›

A point of service plan, or POS plan, is a type of managed care health insurance system. It combines characteristics of the health maintenance organization (HMO) and the preferred provider organization (PPO).

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In which of the following ways do PPOs differ from HMOs? ›

HMOs provide benefits on a prepaid basis. HMOs contract directly with employees. PPOs aim at providing high - quality health services at high costs. PPOs focus on preventive measures and outpatient care.

What is the difference between Medicare Advantage PPO and HMO? ›

The main difference: Using the plan's provider network

Medicare HMO and PPO plans differ mainly in the rules each has about using the plan's provider network. In general, Medicare PPOs give plan members more leeway to see providers outside the network than Medicare HMOs do.

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What is the difference between HMO and PPO quizlet? ›

What is one difference between an HMO and a PPO? HMOs hire care providers, however, PPOs contract other independent providers thus allowing individuals to choose from a list of providers to see.

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Why do doctors not like HMO? ›

HMO plans frequently need primary care physicians to refer patients and have constrained provider networks, which may frustrate some physicians. Yet, HMO plans often have lower consumer out-of-pocket payments, which may appeal to physicians who wish to provide appropriate care.

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What are the differences between HMO PPO and EPO? ›

EPO plans offer a larger network than an HMO plan but typically do not have the out-of-network benefits of PPO plans. EPO plans do not require you to select a primary care physician (PCP) giving you a broader network of providers.

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What is a key difference between an HMO and a PPO? ›

HMO plans typically have lower monthly premiums. You can also expect to pay less out of pocket. PPOs tend to have higher monthly premiums in exchange for the flexibility to use providers both in and out of network without a referral. Out-of-pocket medical costs can also run higher with a PPO plan.

Do HMO have a number of doctors in its network? ›

Each HMO has a network of doctors, medical groups, labs, hospitals, and other providers. You must get approval from your HMO to get care from a provider outside the network, unless it's an emergency, or you need urgent care and are outside your plan's area. Most of the providers you see are also in your medical group.

Do PPO plans have deductibles? ›

Deductibles: PPO plans usually come with a deductible. This means you pay for care and services until the deductible is met. Then your plan starts sharing costs.

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What are two differences between a health maintenance organization HMO and a preferred provider organization PPO )? ›

HMOs (health maintenance organizations) are typically cheaper than PPOs, but they tend to have smaller networks. You need to see your primary care physician before getting a referral to a specialist. PPOs (preferred provider organizations) are usually more expensive.

What are the major similarities and differences between Medicare and Medicaid? ›

While they are both government-run health insurance programs, they generally help two different groups of people: Medicare provides health coverage to those older than 65 and to some younger individuals with certain disabilities, at any income level. Medicaid provides health coverage for people with low incomes.

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