Difference Between HMO and PPO
The Medicare Advantage Plan can be 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 covers care provided by paramedical personnel and hospitals within its network, while PPP covers health care services provided both within and outside the PPO provider network plans.
What is HMO?
Health Maintenance Organization (HMO) means an organization that arranges health insurance and health care benefit plans for individuals and businesses in the US and acts as a liaison with health care providers (staff paramedic and institutes) on a prepaid basis. The HMO Act of 1973 required any employer with 25 or more employees to offer federally certified HMO services if the employer offers traditional health care options. The HMO generally covers medical care provided by paramedical personnel who have agreed by agreement to treat patients in accordance with the HMO’s guidelines. In addition, it also covers emergency care situations of the health care provider’s contracted condition.
What is PPO?
Preferred Provider Organization (PPO) means an organization of physicians, hospitals, and other health care units that have contact with the insurer to provide health care at subsidized rates to the insurer’s clients. PPO membership allows for a discount below the average medical fees of designated professionals associated with these PPOs. The other PPO features are utilization review, precertification requirement, non-emergency admissions, and outpatient surgery. PPO plans provide flexibility to clients, as the client is not required to have a Primary Care Physician (PCP). The client can go to any health professional they want without a referral, inside or outside the PPO network.
- In the HMO, all of a client’s health care services will be coordinated between the client and their designated PCP. PPO plans provide flexibility to clients, as the client is not required to have a PCP. The client can receive treatment from any doctor he wishes, however, he will be able to save little.
- A referral is needed in HMOs if you want to see a specialist, while PPP plans do not require you to get a referral to see a specialist.
- In the case of HMO, the client is not required to file a claim since HMO only allows to take health care services that are in the HMO network. Although it is necessary to file claims in some PPO cases when the client contracts the services of a specialist outside the PPO network.
- HMO covers care provided by paramedical personnel and hospitals within its network, while PPP covers health care services provided both within and outside PPO provider network plans.
- Most HMOs do not have deductibles and also have low copays. PPO plans require payment of annual amounts and deductible amounts will be in addition to any copays.
- However, PPO plans are more flexible compared to other health care plans, but the fact remains that HMO plans are less expensive compared to other managed care providers.