Difference Between HMO vs. PPO

Main Difference

Medicare advantages plan can be broadly divided into 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 covers 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 a prepaid basis. The HMO Act of 1973 required every employer 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 has 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 the 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 provide the flexibility to the clients like the client is not required to have a primary care physician (PCP). The client can go for any healthcare professional he wants without a referral-inside or outside of the PPO’s network.

Key Differences

  1. In HMO all the healthcare services of clients will be coordinated between the client and his designated PCP. PPO plans provide the flexibility to the clients as the client is not required to have a PCP. The client can receive treatment from any doctor he wants, however, he will be able to save low.
  2. A referral is needed in HMO if you want to take care of a specialist while PPP plans do not require you to get a referral in order to visit a specialist.
  3. In the case of HMO, the 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 specialist outside the network of PPO.
  4. HMO cover care provided by paramedical staff and hospitals inside its network while PPP covers the healthcare services provided both inside and outside the plans of PPO provider network.
  5. HMO have mostly no deductibles and have low co-payments as well. PPO plans require payment of annual amounts and the deductible amounts will be in addition to any co-payment.
  6. 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.

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Aimie Carlson

Aimie Carlson is an English language enthusiast who loves writing and has a master degree in English literature. Follow her on Twitter at @AimieCarlson

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