The requirement of health insurance has taken a step post-COVID-19 outbreak. People are now aware of the fact they may need medical emergency at some point in their life. The excessive rise in medical expenses is unbearable for most of us. To overcome this problem, you can opt for two categories of health insurance providers- HMO and PPO. However, before going for any one of these, you should know the difference between HMO and PPO. To know in details, you should give this article a read.
What is an HMO?
An HMO or Health Maintenance Organization consists of a network of healthcare providers who will serve you at a much-negotiated price than average. The concerned insurance provider generally negotiates with the healthcare providers to charge lower fees. Within HMO, you can choose a single physician. Only after a referral from this physician can you see other specialists in the same Network, like a cardiologist or a dermatologist. This doctor assigned to you is your Primary Care Physician or PCP.
The benefits may vary. Different insurance companies will provide benefits in their way. Nevertheless, there is one exception. Under the HMO scheme, women do not need a referral to consult a gynecologist in their Network for their routine check-up.
What is a PPO?
A PPO or Preferred Provider Organization differs much from HMO. In PPO, there is no requirement of a PCP. This plan provides multiple options concerning healthcare service and healthcare providers. You can directly take the appointment of a specialist. There is no need for a referral in this case. You can select your healthcare provider from the Network as well as from outside. The cost will be preferably higher if you select outside the Network of healthcare providers.
Difference between HMO and PPO- a detailed discussion
Which one is More Cost-effective?
PPO generally provides higher premium costs. The reason is it allows you the flexibility to meet a specialist outside the Network. You have the freedom to select a healthcare service at your convenience.
HMO, on the other hand, does not allow you to select a service outside the Network. However, you have the benefit of getting a lower premium cost.
Which one provides a better Network of healthcare providers?
The insurance companies provide a network of healthcare providers for both the plans. They both offer discounted rates to their members. However, there is a subtle difference between HMO and PPO.
The members of HMO must visit their PCP initially, no matter what health issues they are facing. The PCP will refer a specialist within the Network only. There is no story of seeing a doctor or hospital outside the Network in the case of HMO. HMO provides full coverage if you are in the Network. Outside the Network, HMO is not responsible for any treatment and the coverage disappears.
In PPO, you can visit a doctor or hospital out of the Network with certain limitations. PPO offers limited coverage outside the Network.
Do you need to file a claim?
You will not have to file a claim for HMO. Within HMO, the insurance companies pay the healthcare providers since they are all in the same Network.
For PPO, you have to submit the claim form for reimbursement if you take service out of the Network. In this case, you will pay first and then the insurance company will reimburse your amount.
Is there any difference between HMO and PPO regarding prescriptions?
Like doctors and hospitals, HMO has its Network of pharmacies. They provide pharmacy locations from where you can fill your prescriptions. It has limited coverage for sure.
On the other hand, a PPO member has the opportunity to fill the prescription outside the Network. The cost of medicine and other deliverables, in that case, will be higher and you have to pay additional charges.
The Pros and Cons of HMO and PPO
Both HMO and PPO provide healthcare services in their unique way. HMO and PPO have a network of physicians, specialists, pharmacists, hospitals, and other healthcare system providers. These plans and networks vary depending on insurance companies. Still, there are certain basic things of both the plans that are common for all insurance companies. You must know the Pros and Cons of HMO and PPO before selecting any one of them.
Pros of HMO and PPO
1. HMO is pocket-friendly
HMO plan provides a cost-effective solution for the majority of the population. Not everyone is solvent enough to expend a huge sum of money for medical insurance. HMO provides a lower premium than PPO.
2. The need for PCP or Primary Care Physician in HMO
PCP is necessary for HMO. This is advantageous in one way. Your PCP knows everything about your health, especially your medical history. If you need a specialist, he will be able to guide you and show you the proper way of treatment.
3. PPO provides flexibility
Members of PPO have benefits to get treatment outside the Network. You have the right to choose a healthcare provider both within and outside the Network.
4. No referral program of PPO
PPO has the option of no referral. You can visit a doctor or hospital outside the Network without taking any reference. Thus, you will get specific and fast treatment.
Cons of HMO and PPO
1. HMO provides limited services
The members of HMO can take treatments within the Network only. So, you have no option of coverage outside the Network. Once you are out-of-the Network, your coverage is of no value.
2. The need for referral in HMO
Even for a routine check-up, you have to refer to your PCP in the HMO plan. By no means, you can avoid the referral issue, and hence sometimes the process becomes prolonged.
3. High-Cost Premium of PPO
PPO provides flexibility. For this reason, the premium for PPO is higher than HMO. With more benefits, the premium given is higher too.
4. Additional payment for out of the Network in PPO
Within PPO, you have to pay an additional amount if you select a network outside. Not only that, outside the Network, but it is also your responsibility to pay the amount. Your insurance provider will reimburse the amount. That means you have to keep extra money with you for the initial payment.
Which one is better- HMO or PPO?
In the ever-changing healthcare system, there cannot be any specific answer to this. The faint line of difference between HMO and PPO is only for a better understanding of the plans and Network. Choosing one entirely depends on you. You can select the desired plan by analyzing the pros and cons of HMO and PPO.
HMO is highly affordable, while PPO is highly flexible. If your pocket allows you, it is better to go with PPO. If you are thinking of some economical options, HMO is the best option.
Studies show that people are more prone to PPO in case of an employer-supplied insurance plan. Despite the high popularity of PPO, a survey of the National Committee for Quality Assurance or NCQA shows that HMO members are more satisfied than that of PPO.