When you shop for a Medicare Advantage plan, you may see two common choices: an HMO and a PPO. These letters describe how the plan’s provider network works.
A network is the group of doctors, hospitals, pharmacies, and other health care providers that have agreed to work with a health plan. The type of network can affect which doctors you can see, whether you need referrals, and what you may pay for care.
Both HMO and PPO plans can be useful choices for the right person. The better fit often depends on your doctors, travel habits, health needs, and comfort level with using a provider network.
What is a Medicare Advantage HMO?
HMO stands for Health Maintenance Organization. With a Medicare Advantage HMO, you generally receive routine care from doctors and facilities in the plan’s network.
In many HMO plans, you choose a primary care doctor. This doctor may help coordinate your care and may need to give you a referral before you see certain specialists.
For example, if you have ongoing knee pain, you may first visit your primary care doctor. That doctor may then refer you to an orthopedic specialist who participates in the HMO network.
If you use a doctor or hospital outside the HMO network for non-emergency care, the plan may not cover the care, or your costs may be much higher. There are important exceptions. Medicare Advantage HMOs generally cover emergency care and urgently needed care, even when you are away from home. Rules can vary by plan, so it is wise to review the plan details before enrolling.
What is a Medicare Advantage PPO?
PPO stands for Preferred Provider Organization. A Medicare Advantage PPO also has a network of preferred doctors and hospitals. However, PPO plans generally give you more freedom to use providers outside the network.
You usually pay less when you use in-network providers. You may still be able to see an out-of-network doctor or visit an out-of-network facility, but you may pay more for that care.
Most PPO plans do not require a referral to see a specialist. That can be appealing if you want to schedule visits with specialists more directly. Still, an out-of-network provider may choose not to accept the plan, so it is important to confirm before receiving care.
HMO vs. PPO: What are the biggest differences?
The main difference is how much flexibility you have when choosing providers. Here is a simple comparison:
- Provider network: HMO plans generally expect you to use network providers. PPO plans often allow out-of-network care at a higher cost.
- Referrals: HMO plans may require referrals for specialists. PPO plans generally do not require them.
- Out-of-network care: HMOs usually limit non-emergency care outside the network. PPOs may cover it, but your share of the cost can be higher.
- Monthly premium and cost sharing: Costs can vary widely by plan, carrier, county, and state. An HMO may sometimes have lower costs, but this is not always true.
- Doctor access: A PPO may offer more flexibility if your preferred doctor is not in the network, but you should check whether the doctor accepts the plan.
Neither option is automatically better. A strong HMO network may work very well for someone whose doctors, hospital, and pharmacy are all included. A PPO may be worth considering for someone who wants more provider choices or regularly receives care in more than one area.
Do HMO and PPO Medicare plans include prescription drug coverage?
Many Medicare Advantage HMO and PPO plans include Part D prescription drug coverage. These are often called Medicare Advantage Prescription Drug plans.
Each plan has its own list of covered medications, called a formulary. Plans also have pharmacy networks. A medication may be covered, but your costs can still differ depending on the pharmacy you use and the coverage level assigned to the drug.
Before choosing a plan, check that your medications are on the formulary and that your preferred pharmacy is in the plan’s network. You should also review whether the plan has rules such as prior authorization, quantity limits, or step therapy. These rules may affect how and when a medication is covered.
Can you keep your doctors with an HMO or PPO?
You may be able to keep your doctors if they participate in the plan you choose. Do not assume a doctor is in-network just because they accepted a different Medicare plan in the past.
Provider networks can change, and doctors may participate in some plans but not others. It is a good idea to check directly with both the plan and the doctor’s office before enrolling. Ask whether the doctor is in-network for the specific plan name you are considering.
If you see specialists regularly, check them too. Also look at the hospitals, labs, rehabilitation facilities, and pharmacies you prefer. Your care may involve more than just one doctor.
How do Medicare Advantage HMO and PPO plans compare with Original Medicare?
Original Medicare includes Part A and Part B. It generally allows you to see any doctor or hospital in the United States that accepts Medicare. You usually do not need referrals to see specialists.
Medicare Advantage plans are an alternative way to receive your Part A and Part B benefits through private insurance companies approved to offer Medicare plans. HMO and PPO rules may apply to how you get care.
Some people prefer the structure and extra benefits that a Medicare Advantage plan may offer, such as routine dental, vision, hearing, or fitness benefits. These benefits vary by plan and location. Other people value broader provider access and consider Original Medicare paired with a Medicare Supplement plan and a separate Part D plan. Medicare Supplement policies can help with certain out-of-pocket costs under Original Medicare, but they do not work with Medicare Advantage plans.
Which is right for you: an HMO or a PPO?
Consider an HMO if your preferred doctors are in the network, you are comfortable receiving routine care within that network, and you do not mind possible referral requirements.
Consider a PPO if you want more flexibility to use providers outside the network, prefer not to need specialist referrals, or spend time in different locations during the year. Remember that out-of-network care may cost more, and not every provider will accept the plan.
Before making a decision, compare the plan’s provider directory, drug list, monthly premium, deductibles, copays, coinsurance, and annual out-of-pocket maximum. Benefits, provider networks, premiums, and rules can vary by plan, carrier, county, and state.
If you would like help sorting through Medicare Advantage options or comparing them with Medicare Supplement coverage, Eric can offer free, no-pressure guidance based on your doctors, medications, and personal priorities.