HMO vs PPO – Difference and Comparison

What is HMO?

Health maintenance organizations, or HMOs are a form of managed care given by health insurance. An HMO plan requires you to choose your doctor from the list provided by the organization. The organization then pays for most of your medical expenses, but you will have to pay co-payments or co-insurance for some services.

HMOs, require the patient to stay within an assigned network of doctors, which may include specialists and hospitals in the area. This can help reduce costs because it is less expensive than having out-of-network providers.

HMOs also offer a wide range of plans, including those designed for people with specific needs, such as pregnancy or mental health issues. There is a great convenience when all your healthcare needs are managed from one place.

Taking an HMO plan means you are restricted to the contracted health care providers, and the bigger the geographical location, the more choice of providers you have.

Health insurance pays for most of the cost of your medical care. It can be either a plan you buy from an insurance company or your employer buys for you.

What is PPO?

A Preferred Provider Organization (PPO) is a type of health insurance covering the medical expenses incurred by the insured person if they use providers in their plan’s network.

The PPO is a managed care plan, meaning the insurer manages which doctors and hospitals a patient can visit. PPOs allow you to go to providers, not in your network, but the insurance company will only pay for some of the costs if you do so.

This medical coverage is for individuals and families and lets you see any doctor in that network without needing a referral. That also means you don’t have to have a primary doctor. Like in all health care plans, you have to pay a monthly fee and sometimes co-pays for you to enjoy the benefits of this plan.

The amount of the monthly fees and co-pays depends on your medical needs. The more regularly you need to see a doctor and the more specialized treatment you need, the higher the cost. Seeing a specialist outside your plan’s network will require you to pay higher out-of-pocket payments.

Difference Between HMO and PPO

HMO stands for Health Maintenance Organization. This kind of health insurance has a list of doctors and hospitals who provide services at lower rates to their members as long as they remain on the list. It may also cover service obtained outside of the network if it was a case of emergency.

PPO stands for Preferred Provider Organization and is also a type of health insurance plan. The plan covers any medical service that your preferred providers offer, which means that it will not cover any medical service provided by providers who are not in your network.

Comparison Between HMO and PPO

Parameter of ComparisonHMOPPO
Full nameHealth maintenance organizationPreferred provider organization
ReferralYou have to get a referral for you to consult a specialist.You don’t have to have a referral to consult a specialist.
Out of network coverThey don’t meet your costs if you see a doctor outside the network of their providers except in emergencies.They cover you even if you see providers out of their network, up to a specified amount.
Best whenYou have no need to see specialists.You need varying specialized care.