According to the U.S. Bureau of Labor Statistics, consumer prices for healthcare have risen dramatically over the last twenty years. With costs increasing, it’s important to choose a plan that suits your specific needs.
Health maintenance organizations (HMOs) and preferred provider organizations (PPOs) are the most common types of health insurance plans in the United States. According to the Washington Post, approximately 80 percent of all healthcare plans are HMOs or PPOs.
Understanding the differences between the two could potentially save you, your business, and your employees thousands in health insurance costs.
HMOs: The Basics
HMO plans require the purchaser to choose a primary care provider (PCP), sometimes also referred to as a “primary care physician,” who will become their gateway to healthcare. In most cases, PCPs are family medicine doctors, internal medicine doctors, pediatricians, or gynecologists.
In most cases, referrals are needed from the PCP in order to see a specialist, such as a dermatologist or cardiologist. HMO plans also require members to visit healthcare providers or hospitals specifically included in that plan, except in the case of health emergencies or certain other circumstances, such as selected yearly screenings like mammograms.
If the plan member chooses to receive health care without a referral or seeks care outside of the HMO network, they may not be covered by their insurance. Additionally, if one’s PCP were to leave the network, a new PCP must be chosen to continue coverage.
PPOs: The Basics
PPO plans don’t usually require members to declare a PCP, and they often favor the use of an established network of hospitals, clinics, and specialists. However, they do provide some benefits outside of a specific network. So, receiving care through your PPO may have lower upfront costs, but those costs could increase if you seek care outside of your PPO.
HMOs vs. PPOs
As you can see, there are benefits and drawbacks to both options. This is why it is important to do your own research to determine the quality and coverage of a plan’s network in order to make sure it suits your personal needs.
As you evaluate your choices, keep the following in mind:
When looking at an HMO plan, consider:
- HMOs require a designated primary care provider, who acts as your personal health advisor.
- You must receive a referral from your PCPC in order to visit a specialist.
- HMO plans do not cover care outside of a specified network, so be sure to choose a network with plenty of providers and facilities.
- HMO plans allow the patient and their PCP to build trust in personal care.
When looking at a PPO plan, consider:
- PPOs do not have a requirement for choosing a PCP.
- You do not need to receive a referral in order to visit a specialist for a consultation or to receive treatment.
- PPOs offer reduced costs for healthcare received within preferred networks.
- Utilizing out-of-network care centers may have reduced benefits.
Though HMOs and PPOs apply coverage differently, most of the time, both plans cover the cost of prescription drugs.
References
Andrews, M. (2014, August 25). What’s the best health plan for you? HMO, PPO, EPO or POS? The Washington Post. Retrieved fromhttps://www.washingtonpost.com/national/health-science/whats-the-best-health-plan-for-you-hmo-ppo-epo-or-pos/2014/08/25/772f96a8-27c1-11e4-958c-268a320a60ce_story.html
Health maintenance organization (HMO) plan. (n.d.). Medicare.gov.
Preferred provider organization (PPO) plans. (n.d.). Medicare.gov.
United States Department of Labor. (2016). A look at healthcare spending, employment, pay, benefits, and prices. Bureau of Labor Statistics.https://www.bls.gov/spotlight/2016/a-look-at-healthcare-spending-employment-pay-benefits-and-prices/home.htm
