Medicare Advantage: PPO vs HMO

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Medicare Advantage PPO vs HMO – If you’re considering a Medicare Advantage plan, it’s very important that you understand the different types available and how your coverage will differ under each one. Not understanding how your plan works could cost you thousands of dollars.

Two of the most common types of Medicare Advantage plans are PPOs and HMOs. Today, we’ll discuss the rules under each one, how they’re the same, and how they’re different. We’ll also discuss a less-known Medicare Advantage type, the HMO-POS.

How Does a Medicare Advantage HMO Plan Work?

HMO stands for Health Maintenance Organization. These plans rely heavily on provider networks to care for their members. They do this to control costs while maintaining effective, valuable, quality care for enrollees. Providers and facilities who choose to participate with an HMO plan agree to accept a set payment for each HMO member they see.

HMO members must see a provider who participates in their plan. Care received from a non-contracted (or out-of-network) provider is not covered by the plan. In that case, the member would be responsible for the entire cost of services. The only exception to this rule is during emergency situations when access to an HMO provider is impossible.

In addition, HMO members must designate a primary care physician (PCP). They must go through that PCP for all their care, even if they need to see a specialist. If a member sees a specialist without a referral, they will have no coverage, even if that specialist is a participating provider. Their PCP will coordinate care inside and outside of their office. While this can be seen as a limitation of an HMO plan, the idea is that your PCP will have full knowledge of your health.

All Medicare Advantage plans have a maximum out-of-pocket limit or MOOP. Generally, your MOOP with an HMO plan will be lower than with a PPO plan.

That doesn’t sound too bad, right? HMO plans are not bad – as long as you know how to use them! One area many people get caught up on is when multiple providers are involved in their health. For example, if you are having surgery, you need to make sure the facility and every provider on your team participate in your plan. There is always more than just the surgeon involved. It’s not always possible to coordinate this perfectly, but as long as you are aware of it, you’ll be able to avoid any surprise medical bills.

Senior couple with coffee on the kitchen at home enjoying there low-cost HMO and PPO plans
Like HMO plans, PPO plans often have very low monthly premiums. (Some are even as low as $0 per month!)

How Does a Medicare Advantage PPO Plan Work?

Medicare Advantage PPO (Preferred Provider Organization) plans work similarly to the HMO option but with fewer limitations. For starters, PPO plans allow their enrollees to receive care from a non-contracted provider. That being said, that care will usually come with higher out-of-pocket costs. For example, a doctor’s visit to a PPO provider might cost you $10, but if you see a non-PPO provider, it could cost you $25. Every plan is different, of course, but you should try to see a participating provider when possible. PPO enrollees also do not have to choose a PCP, nor do they need to obtain a referral to see a specialist.

Like HMO plans, PPO plans often have very low monthly premiums. (Some are even as low as $0 per month!) However, PPO plans typically have higher deductibles and higher MOOPs.

The advantage of having a PPO plan is that individuals have more options. PPO networks are often larger than HMO networks, so you are less restricted on which providers you can see. They’re also helpful for those who frequently travel as most insurance carriers use nationwide PPO networks versus those just based in one region.

What Is an HMO-POS Plan?

One other type of Medicare Advantage plan that doesn’t get mentioned frequently is the HMO-POS plan. The POS stands for “Point of Service.” These plans combine some of the rules found in HMO and PPO plans, and they use an HMO network.

Individuals with an HMO-POS plan do not have to choose a PCP or get a referral to see a specialist. They also enjoy some out-of-network benefits, but like the PPO option, they’ll pay more for out-of-network care. At this point, these plans sound exactly like a PPO plan.

There are two main differences. First, HMO-POS plans often have separate deductibles and MOOPs for in-network versus out-of-network services. The maximum out-of-pocket for out-of-pocket care is usually several thousand dollars more than for in-network.

Second, it could be that only part of the plan offers out-of-network benefits. For example, it may be that only the dental portion of the plan works for non-contracted providers. Be very careful to read how the coverage works on these plans, and do not assume you’ll have coverage anywhere you go.

If you’d like to learn more about Medicare Advantage plans, speak with one of our licensed insurance agents. We can answer any questions you have about your current plan or look at new ones you may want to choose from in the future.

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