Medicare advantages plan can be broadly divided in to four plans but in these plans Health Maintenance Organization (HMO) and Preferred Provider Organization (PPO) are the most common types of insurance plans. The main difference between HMO and PPO is that HMO cover care provided by paramedical staff and hospitals inside its network while PPP cover the healthcare services provided both inside and outside the plans of PPO provider network.
What is HMO?
Health Maintenance Organization (HMO) refers to an organization that arranges the health insurance, and healthcare benefits plans for the individuals and companies in the US and acts as a liaison with the healthcare providers (paramedical staff and institutes) on prepaid basis. The HMO Act of 1973 required every employers having 25 or more employees to offer federally certified HMO services if the employer offers traditional healthcare options. HMO usually covers healthcare rendered by those paramedical staff that have agreed by an agreement to treat patients in accordance with the HMO’s guidelines. Moreover, it also covers the emergency care situations of the healthcare provider’s contracted status.
What is PPO?
Preferred Provider Organization (PPO) refers to an organization of doctors, hospitals, and other healthcare units who have contact with insurer to provide healthcare at subsidized rates to insurer’s clients. The membership of PPO allows a discount below the average medical fees of the designated professionals partnered with these PPOs. The other features of PPO are utilization review, pre-certification requirement, non-emergency admissions, and outpatient surgery. PPO plans provides the flexibility to the clients like client are not required to have a primary care physician (PCP). Client can go for any healthcare professional he want without a referral-inside or outside of the PPO’s network.
- In HMO all the healthcare services of clients will be coordinated between client and his designated PCP. PPO plans provides the flexibility to the clients as client is not required to have a PCP. Client can receive treatment from any doctor he wants, however he will be able to save low.
- Referral is needed in HMO if you want to take care of a specialists while PPP plans do not required you to get a referral in order to visit a specialist.
- In case of HMO, client is not required to file a claim as HMO only allow to take the services of healthcare that are in the network of HMO. While claims are required to be filed in some cases of PPO when client take the services of a specialists outside the network of PPO.
- HMO cover care provided by paramedical staff and hospitals inside its network while PPP cover the healthcare services provided both inside and outside the plans of PPO provider network.
- HMO have mostly no deductibles and have low co-payments as well. PPO plans requires payment of annual amounts and the deductible amounts will be in addition to any co-payment.
- However, the PPO plans are more flexible as compare to other healthcare plans but the fact is that HMO plans are less expensive as compare to other healthcare management providers.