HMO
vs. PPO
Q: What is the difference between an
HMO and a PPO? Which one is better?
Answer:
Health maintenance organizations (HMOs) and preferred provider
organizations (PPOs)
are both types of managed health-care
systems. There are differences between
the corporate structures of each, but
they are typically not important to
the average consumer. However, several
other important distinctions exist,
including the following:
HMO members must choose
a primary care physician (PCP) from
among the HMO member physicians. The
PCP provides general medical care and
must be consulted before you can see
a specialist, who must also be part
of the HMO. PPO members do not choose
a primary care physician and can refer
themselves to specialists.
HMOs typically provide no coverage for
care received from non-network physicians
(with exceptions for emergency care
while traveling, etc.). PPO members
are not required to stay within the
PPO network, but there is usually a
strong financial incentive to do so.
For example, the PPO may reimburse 90
percent of costs for care received within
the network, but only 70 percent of
costs for non-network care.
HMOs typically do not set deductibles
that must be met before insurance benefits
begin (e.g., $5 or $10 ). Instead, HMO
members often pay a nominal co-payment
for care. In contrast, PPOs sometimes
require members to meet a deductible
(especially for hospitalization) and
may have larger co-payments than HMOs.
So, which is better? Of course, there
isn't one right answer; the best choice
depends on your particular needs. For
example, if you are considering an HMO,
it's important to make sure that your
physician is part of the HMO network
(unless you are willing to see another
physician). If not, a PPO might be a
better choice, because you can still
receive at least partial coverage regardless
of network affiliation. You might also
prefer a PPO if you have a medical condition
that requires specialized care, because
PPO members do not need a referral before
seeing a specialist. However, if ongoing
out-of-pocket costs are a major concern,
an HMO is often a better choice, because
there are no deductibles and co-payments
are typically lower.
If you are fortunate enough to have
a choice between HMO and PPO coverage, you will need
to take some time to evaluate the coverage
offered by each and determine which
one best suits the needs of yourself
and your family.
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