What are the advantages and disadvantages of HMO vs PPO health insurance plans? To give you a better understanding, lets look at the two types of networks so that you can look at the working parts and get a much clearer view of how each of these plans work. Then we will take a look at the dollars and sense aspects of each of these two types of plans to evaluate which type would make the most sense to have when you put in to consideration the final factor: Your own personal situation.
HMO vs PPO fact: Both of HMO and PPO plans are types of networks. HMO stands for Health Maintenance Organization and PPO stands for Preferred Provider Organization. They are not health insurance plans per se, but managed care networks initially designed to control health care costs.
HMO (Health Maintenance Organization) Networks
How do HMO networks work? If you have a health insurance plan that is administered by a health maintenance organization, then the doctors and hospitals that accept your plan are all a part of the same tight network of providers. Many times this consists of a central hospital, outpatient surgery and diagnostic centers, specialists affiliated with the hospital, and general practitioners, such as pediatricians and obgyn doctors in satellite offices.
You will have to choose a primary care provider that in many ways serves as a gatekeeper for the HMO. It is through your primary care physician that you will be able to get referrals to specialists and having diagnostic tests done. Most non emergency procedures must be pre-approved by the HMO through your primary care doctor in order for the insurance benefit to be paid. In most cases, the service must also be provided by a care provider within the HMO.
In accidents and emergencies this is not the case, as in most states, insurance coverage is required to be the same in or out of network in the case of accidents and emergencies.
So what are some advantages of HMO networks?
Medical Records: Your medical record are maintained centrally by the HMO so that they are easily accessible by all providers within the network. The providers are not reliant on having to request records from another doctor or diagnostic center which can be a huge time saver when it comes to providing service.
Knowing what you will have to pay for services: HMO networks usually have a very rigid guideline as to what they charge for each type of service and billing is in most cases handled in house. This makes it much easier to plan and budget for any medical services you may need ahead of time.
Level of Care: Most HMO networks have high standards of which providers they will allow into the network, and are known for quality control when it comes to providing medical services.
Level of Benefits: In most cases, the level of benefits, what services are covered, and lower out of pocket costs for members are an advantage of these health insurance plans.
What are some disadvantages of HMO networks?
Limited Geographical Availability: HMO networks usually exist in highly populated geographical clusters. Many times they are not available in rural areas or its providers may be a considerable driving distance for those in areas outside a metropolitan area.
Having to Choose a Primary Care Provider: This can be a hard decision because this doctor will be the primary gatekeeper to medical care. It is more difficult to switch doctors and to get second opinions.
PPO (Preferred Provider Organization) Networks
How do PPO networks work? If you have a health insurance plan that is administered by a Preferred Provider Network, then you can choose any provider within or outside of the network. If you choose to use a doctor that is outside of the network, your coverage for that service is reduced so that it will cost you more out of pocket, but the choice is yours.
In most cases, you can choose to have services provided by any provider without referral, (although many specialist will not see you without a referral) but this gives you many more options as you are not locked in to receiving your care through one doctor.
PPO networks are generally structured like this: Providers agree to accept reduced payment for services in order to accept insurance policies administered through the PPO network. In turn, they are able to have a much larger client base to serve.
What are some advantages of PPO networks?
Choice: You have a greater deal of choice as to which providers you use, as to which types of services you wish to have done, and it is much easier to switch doctors and to get second opinions.
Availability: PPO networks are widespread and include a very large portion of all providers across the U.S. and include providers in rural areas.
What some disadvantages of PPO networks?
Variation of out of pocket cost. Many providers negotiate the reduced costs for the services they provide so the same service may cost you two different prices between two providers, so if you have one of these plans, it is smart to shop around.
Transferring medical records: Since the records are not maintained centrally, it is more difficult to have records transferred between doctors. This is a situation that is changing with advanced technology.
HMO vs PPO: Putting Your Personal Situation into the Decision
After having all of this info to digest, you have to take into consideration you own personal situation. Do you live in an area that has easy access to an HMO? Do you value a centralized medical approach or do you value choice? Do you like to know beforehand what your out of pocket cost will be or would you rather be able to search for a lower cost provider?
All of these are factors to consider when considering making a choice of HMO vs PPO.
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