Pros and Cons of Each

  • HMO and PPO plans offer different types of coverage so it is important to know which is best for you.
  • HMO plans are often less expensive with low deductibles, but are more limiting than PPO plans.
  • PPO plans are more expensive, but usually cover some off-network costs, as opposed to HMOs.
  • Visit the Insider Health Reference Library for more tips.

Health insurance coverage in the United States is a complicated process burdened by different plans and prices. To help you navigate through it all, let’s discuss the difference between two main coverage options: HMO (Health Maintenance Organization) and PPO (Preferred Provider Organization)

Understanding the difference between HMO and PPO insurance plans can not only help you choose the right one for your needs, but also help you avoid costly, unexpected medical bills.

HMO Vs. PPO plans

HMO plans tend to be cheaper than PPO plans, but they are also generally more restrictive.

HMO plans typically have lower premiums, lower copayment amounts, and lower deductibles (unless a high deductible plan is chosen to lower overhead costs).

However, you cannot directly view a network specialist. First, you should go through a primary care physician who will refer you to a specialist. If you do not have a return, chances are that your insurance will not cover the visit.

You are also dependent on your doctor’s referrals when you need to see a specialist, who may delay your treatment and limit your options. For example, if you have an earache, you should first visit your primary care doctor, instead of going directly to an ENT specialist.

PPO plans, on the other hand, offer you a wider network of doctors and hospitals. These plans do not even restrict you to a single primary care physician, which means you can visit a specialist without a referral.

Therefore, PPOs are a good option for people who want more flexibility in choosing their health care providers, people who travel often, or people who need to visit specialists regularly because they have chronic health conditions.

It is also important to note that while PPO plans offer more flexibility, they also tend to be more expensive than HMO plans. But unlike HMO plans, PPOs pay a portion of the costs for out-of-network health care, typically 50%.

In summary, here is a breakdown of the pros and cons for HMO versus PPO plans:

If neither HMO nor PPO seem like your ideal plan, there’s even a middle ground. They are called hybrid plants. One example is the Exclusive Provisioning Organization (EPO) plans, which combine aspects of HMO and PPO.

EPOs do not require a primary care physician, for example, but will limit coverage to providers or network structures. Be sure to read the materials sent by your healthcare plan to understand the detail, especially when referrals are needed.

What happens if I have a surprise invoice?

Once you have an HMO or PPO plan, there are some cases where it can also be confusing to know when to get online versus offline coverage. And if you accidentally go off-network – especially on an HMO plan – it can lead to a surprisingly expensive bill.

In fact, according to a Study 2020, around 18% of emergency room visits in the United States result in at least one surprise bill.

“If you receive an out-of-network invoice that you didn’t expect, check with your insurance company, your employer (if you’re insured with your job), your state insurance department, and, if your state has one, a consumer assistance program to learn your rights and next steps. You can appeal the charges, ”Fish-Parcham says.

Also, if you have received treatment and cannot afford your medical expenses at all, you can contact the hospital’s billing department and request a payment plan.

Hospitals typically charge no interest and you can split the payment into monthly installments that you can pay without damaging your credit rating. If your invoice is not paid and sent to a collection agency, interest is charged and it is more difficult to negotiate the balance due.

You can also consider getting additional insurance to help cover all off-net costs that your primary insurance does not cover.

How do I tell if a doctor or service is offline?

According to Cheryl Fish-Parcham, director of access initiatives at USA families, a non-profit health advocacy organization, there are a few ways to check if a doctor or service provider is online:

  • Ask your doctor’s office if they take out your insurance when you make your appointment. Use the specific name of your plan; for example it’s not just “Blue Cross”, it’s “Blue Cross Premier Preferred Silver”.
  • Check your online provider’s online insurance company directory to see if your provider is listed, or to find a provider near you. Note that even though online directories are regularly updated, they are not a solid test of the state of the network.
  • Call the number of member services of your insurance company and ask if the provider is online. Document who you are talking to, with the date, in case of confusion at a later time.

“For hospitals, it’s a little more complicated; you can call the hospital and check with your insurance company to see if the hospital itself is online, but that doesn’t guarantee that all providers who see you in the hospital will also be in your network, ”says Fish-Parcham.

Some doctors, such as anesthesiologists, for example, or services received at the hospital, such as lab work or emergency care, may be considered offline, even if the hospital is online, according to Fish- Parcham. This is because these doctors or service providers may not be accepting the fees or terms from your insurance company.

In this case, you may be asked to pay the provider the amount that is not covered by your insurance company; this is called equilibrium factoring. Many, but not all plans will cover emergency services to network status although you may have to demonstrate later that it was a real emergency.

“You should always make sure that your local hospital and anyone else you can use – especially if you have a chronic illness – is online when you sign up for your insurance plan. If you can plan ahead and know you have a treatment, surgery or pregnancy, make sure the doctor, surgeon, or NICU is also networked in that hospital, ”she says. Caitlin Donovan, a spokesman for the National Patient Advocate Foundation.

Take away the Insider

Choosing the right insurance plan for your needs is important to avoid surprise bills.

HMO plans are more affordable but are more restrictive in terms of providers. PPO plans offer more flexibility in the choice of suppliers and cover some of the costs of out-of-network suppliers.

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