Selecting the best health plan option for you and your family can be a confusing task if you are unfamiliar with or don’t understand the ins and outs of the different plans being offered. Although most insurance carriers must provide certain benefits on all of the plans they offer, individual benefits and how they are administered can differ so it’s important to learn the differences.
Two of the most popular types of health plans are HMOs and PPOs. Overall, the benefit structures offered for both plan types are similar but each also has specific limitations and requirements that the member must follow. If the requirements aren’t followed there may be a lack of coverage or benefits may be paid differently than expected.
HMOs and PPOs are similar in that they both rely on using a preselected network, or group of doctors, to provide care to their members. To receive the highest quality and most efficient health care the member must use doctors in the network. Using doctors outside of the network may result in reduced benefits or no benefits at all. The most significant difference between HMOs and PPOs is the way that care is administered.
A health maintenance organization, also known as an HMO, is the more restrictive of the two types of plans. While both utilize a network of doctors to provide care, the HMO requires the member to select a primary care physician (PCP) to manage all of their health care. The thought behind this process is that a primary care physician knows their patient and is the best to address their medical needs while still managing costs.
The HMO philosophy places the decision making authority for all care in the hands of the primary care physician. This means that when a health condition is discovered, the doctor is responsible for determining the course of care. The patient must be referred by the primary care physician before seeing another physician, such as a specialist. This can be frustrating for people who want to have the freedom to choose their own care. If a patient chooses to see a doctor to whom they were not referred, there generally will not be any coverage and the patient will be responsible for all costs.
For members looking for a little more control over their own health care, a preferred provider organization, or PPO, may be a better option. Generally, the premium for this type of plan will be a little higher than a HMO because it is less restrictive and allows the member to have more flexibility and decision making in their care options.
A PPO does not require a member to select a primary care physician. However, they are required to choose physicians that participate in the selected network. No referral is needed to see a specialist or get a second opinion. As long as the doctor is in the network they are eligible on the plan. Unlike a HMO, there are generally benefits for those that choose to see a doctor outside of the network. But, they should expect to pay more of the out of pocket cost themselves since they choose to go outside the network.
So HMO vs PPO, which is better? it really comes down to price and physician access. Those willing to accept a more restrictive system where the doctor steers the care based on cost effective measures to lower premiums may find a HMO is the answer. Those looking for wider access and patient choice would benefit from a PPO.