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What Is a Medicare HMO? What Are the Differences Between HMOs and PPOs?

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There are four main types of Medicare Advantage plans, but Health Maintenance Organization (HMO) plans and Preferred Provider Organization (PPO) plans are the most common types. Here is a comparison of the two varieties:

  • HMO plans require that beneficiaries see health-care providers, doctors, and hospitals within the plan’s network except in urgent and emergency situations. In some plans, known as HMO Point-of-Service (HMO-POS) plans, beneficiaries may be able to go out-of-network for certain services, but may have to pay a higher cost.
  • PPO plans do not require that beneficiaries use in-network providers and do not require a referral to see a specialist.
  • HMO plans may require that beneficiaries choose a primary care physician.
  • PPO plans do not require that beneficiaries choose a primary care physician.
  • Both HMO and PPO plans generally include prescription drug coverage through a Medicare Advantage Prescription Drug plan (MAPD).

About HMOs

You will need to choose a primary care doctor upon enrolling into most HMO plans, and most of the time this doctor will have to refer you to see a specialist. Some services, like yearly screening mammograms, do not require a referral.

Prescription drugs are covered under most HMO plans called Medicare Advantage Prescription Drug plans. Check with the plan you’re interested in first if you want it to include Medicare Part D prescription drug coverage.

If your physician leaves the plan’s network of providers, you will be notified of his or her departure. You can then select another doctor from within the plan’s network.

Another thing to remember is that if you use an HMO, you agree to receive coverage within that plan’s network except in urgent and emergency situations. You can still receive health care outside of the plan’s network, but be aware that the plan may not pay for these services.

About PPOs

Medicare Advantage PPO plans provide another managed-care option for beneficiaries who want greater provider flexibility. With a PPO plan, your out-of-pocket costs will generally be lower if you use doctors and hospitals in the plan’s preferred provider network. You may also choose to use out-of-network providers, but your copayment and coinsurance costs may be higher.

As mentioned, PPOs don’t require members to have primary care doctors, and referrals aren’t needed before seeing a specialist. If you prefer the convenience of getting specialist care directly, without needing a referral from a primary care physician, this may be one factor to consider when choosing between an HMO or PPO plan.

Like HMOs, you can get Medicare prescription drug coverage through your PPO plan by enrolling in a Medicare Advantage Prescription Drug plan. Keep in mind that not every PPO plan includes prescription drug benefits, and costs and benefits may vary by plan.

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