HMO Vs. PPO

HMO or PPO, which is better? Which one should I choose? What is the difference between PPO and HMO? These are some common questions that come to our mind when we are deciding on our health insurance plan. But before knowing which insurance plan is better, let us first take a look at what is HMO and PPO?

What is HMO?

The HMO, or Health Maintenance Organization, is a prepaid managed health care plan, which provides doctor visits, hospital stays, diagnostic tests, surgeries and all other health care services to the insured. In this plan, entire health services are managed by a primary care provider (PCP), who is under a contract with the HMO. The insured is assigned to this PCP and to refer other doctors and specialists, the insured has to go through this provider. In most cases, the doctors and the specialists are also contracted with the HMO. Therefore, the insured cannot choose the hospital or specialist and whatever care or services that are to be given through a network health care provider or should be previously authorized by the PCP. However, for your children, you can choose a pediatrician or a family physician to be their PCP. For any diagnostic services like lab tests or X-ray, your provider will give you the referral, but in case you don't have a referral or want to go to a doctor outside your HMO's network, you will most probably have to pay for all or most of the cost for that care.

What is PPO?

Similar to HMO, PPO or Preferred Provider Organization is also a prepaid managed health plan that has contracts with a network of preferred providers from which the insured can choose. You need not have to select a PCP or need referrals to see other providers in the network, rather if you receive care from a doctor or specialist in the preferred network, you will only be considered responsible for your annual deductible and a co-payment for your visit. However, the member health care providers and the PPO sponsors will have already negotiated the cost for each type of service they provide. The insured normally has to pay for the services provided, and the PPO sponsor reimburses the insured for the cost of the treatment. Although in this plan the insured has the freedom to receive health services outside the preferred network, he/she has to pay a higher amount and file a claim with the PPO to get reimbursed.

HMO Vs. PPO Health Insurance

Factors	HMO	PPO
Premiums	HMO is far less inexpensive than PPO, as the copay is very low or sometimes even free.	PPO is more expensive, especially if your specialist is not a member of the PPO network you have enrolled, you will have to pay more from your pocket.
Claims	All the providers are expected to file a claim to get paid. The insured need not file a claim and the provider has to do it on their own for which he/she will not charge the insured.	If the insured is getting care from a network provider, he/she need not file a claim but if the insured is taking care outside the preferred network, he/she has to pay the provider in full and then file a claim with the PPO to get reimbursed.
Referrals	In HMO, the insured always needs a referral to consult a specialist or doctor, except in emergency situations.	In PPO, the insured need not require a referral to see a doctor.
Rules and Regulations	HMO has restricting rules and regulations like the insured can refer only to the doctors on the HMO list and there are fixed patient quotas wherein the doctors have to see a specific patient quota every day.	PPO is more flexible, as the insured can refer doctors outside the preferred network.
Best For	People who are in good health and require medical checkup only once or twice a year.	People who have frequent doctor visits, require enough time with their doctor and demand more freedom in their health care choices.

I hope this article provides you a fair idea of what exactly these health insurance plans are and which plan is more affordable and suits your requirements. Whichever plan you prefer, make sure you do not compromise on your health and choose the best health plan. However, if still you are unable to decide, consult your state health department or a certified insurance agent for more details and a clearer picture.