What's the Difference Between Medicare Advantage HMO vs PPO?

The most common types of Medicare Advantage plans are HMO and PPO plans.

Medicare Part C, or Medicare Advantage plans, are an alternative way to receive your Medicare benefits and coverage. Sold by private insurance companies, they offer all the same benefits as Original Medicare Part A (hospital insurance) and Part B (medical insurance) but often include additional coverage for things like vision, dental, prescription drug coverage, fitness memberships, and more.

When it comes to choosing a Medicare Advantage (MA) plan, beneficiaries have a number of options. In fact, there are four common types of MA plans, with the most popular being Health Maintenance Organization (HMO) and Preferred Provider Organization (PPO) plans. Which is right for you depends on your individual needs, but read on to learn more about these plans to help make your decision easier.

What is a Medicare Advantage HMO plan?

A Health Maintenance Organization plan, or HMO, offers a network of doctors who you can choose from for all of your medical services and needs. The providers in the plan’s provider network are those who are contracted with the insurance company to give you the care you need, and may include:

·       Doctors

·       Nurses

·       Hospitals

·       Labs

·       Pharmacies

·       Specialists

·       Durable medical equipment (DME) suppliers

With an HMO plan, most of your health care services will be covered by your plan’s provider network with the exception of emergency or urgent care needs or dialysis. Typically, you'll pay less for non-emergency care with an in-network provider than if you see someone who is out-of-network.

When you join an HMO plan, must choose a primary care physician (PCP) who will provide most routine health care services, give you referrals to see a specialist, and coordinate pre-approval for other types of medical treatment when necessary. In most cases, HMO plans require you to get a referral from your PCP to see any type of specialist.

Many HMO plans also cover prescription drugs, known as Medicare Advantage Prescription Drug plans (MA-PD). However, note that not all plans offer this coverage so check a plan’s coverage carefully prior to joining.

Additionally, in most cases, HMO plans have lower co-pays and premiums than other types of Medicare Advantage plans.

Related Reading: How do HMO plans work?

What is Medicare Advantage PPO?

A Preferred Provider Organization plan, or PPO, gives beneficiaries the flexibility to choose any primary or specialty care provider they would like regardless of network availability. These plans do have a provider network of “preferred” providers, and you will pay less for care if you stay in network. However, you can also go to an out-of-network provider and still have your care covered (though it will cost you more).

Like HMO plans, many PPO plans offer Part D prescription drug coverage. However, unlike HMO plans, you do not have to choose a PCP and you do not need a referral to see a specialist.

Typically, PPO plans have higher monthly premiums, but they may also have more comprehensive coverage and greater provider flexibility. They often include more services or coverage than other plans for things like hearing aids, dentures, wellness programs, therapy, emergency care, travel coverage, and more.

Related Reading: What is a PPO plan?

Difference between HMO and PPO

There are a few primary differences between and HMO and PPO plan:

·       HMO plans have a provider network, and for your care to be covered, you must see a provider who is in network. If you see an out-of-network provider for non-emergent care, it may not be covered

With a PPO plan, you can see in- and out-of-network providers and the care will be covered; however, you’ll pay less if you see an in-network provider

·       With an HMO plan, you are required to choose a primary care doctor to help oversee and coordinate your care while with a PPO plan you are not

·       In most cases, HMO plans require you to get a referral from your PCP to see a specialist. However, you typically don't need referrals with a PPO plan

·       HMO plans often have lower co-pays and premiums than PPO plans

Knowing which plan is better for you depends on your individual needs. For example, you may want to ask yourself questions like:

·       Is my preferred doctor/hospital/pharmacy in my plan’s network?

·       Do I want to be able to choose my own specialist and see one without a referral?

·       How important is lower cost coverage?

·       What types of medical treatment access and coverage is most important to me?

Answering these questions can help you determine whether an HMO or a PPO plan is right for you.

When to choose an HMO plan

An HMO plan may be better if:

·       You prefer lower co-pays and premiums

·       You don’t mind getting a referral for specialty care

·       You prefer to have a primary care provider to help coordinate your care

·       Your current providers are in a plan’s network, or you are willing to switch to in-network providers

Generally, if you don’t mind using a PCP to manage your care and if lower costs are important, you should consider an HMO plan.

When to choose a PPO plan

A PPO plan may be better if:

·       You already have an established provider or medical group and don’t want to change

·       You don’t mind paying higher co-pays or premiums

·       Flexibility to choose your own PCP or specialist is important to you

·       You often need to see a specialist and don’t want to have to wait for a referral

·       You want more comprehensive coverage or coverage for more services or coverage than other plans may provide

·       You travel regularly or live in different places during the year

If you want flexibility with providers and care, want to see a specialist without a referral, and don’t mind paying a higher cost for care, consider a PPO plan.

Other types of Medicare Advantage plans

There are two other types of Medicare Advantage plans, including Special Needs Plans (SNP) and Private Fee-for-Service plans (PFFS).

Special Needs Plans

To qualify for an SNP, you must:

·       Have Medicare Part A and Part B

·       Live within the plan’s service area

·       Meet the plan’s eligibility requirements, including having one or more severe, debilitating, chronic conditions

SNPs are specifically designed for people who have certain chronic conditions. This includes access to medical providers and specialists tailored to your specific needs or conditions and prescription drug coverage. 

Private Fee-for-Service plans

PFFS plans are offered by private insurance companies and are similar to PPOs in that you don’t need to choose a PCP. However, these plans typically have a provider network you must use and charge more out-of-pocket when you see a non-preferred provider.

Note that these plans are different from other MA plans because they negotiate prices for every type of service and a provider may accept or decline the plan’s terms for a service. This means a provider who accepted your plan previously may not accept it again for a future visit.

If you join a PFFS plan, it’s critical to check whether your provider accepts your plan’s terms before scheduling a visit or care. Otherwise, you may be on the hook to pay the entire cost out-of-pocket.

Get help with your Medicare questions

If you have questions about your Medicare plan options, we can help. One of our licensed insurance agents can answer all your questions and help you determine which type of Medicare plan is best for you based on your health care needs. Call us toll free at 1-855-760-5164 TTY: 711 or use our online Find a Plan tool to learn more.

Additional resources

Since 2003, Kolt Legette has helped clients navigate the often-confusing world of insurance. His number one goal is protecting the medical and financial wellbeing of every person he speaks with, whether they choose to buy insurance or not. Kolt loves representing the best brands in medical insurance as it allows him to provide side-by-side comparisons for his clients. This allows the client to decide which company works best for them. By putting the needs of the client above everything else, Kolt helps real people find affordable health insurance solutions for their most pressing healthcare needs. With his belief that peace of mind is priceless, Kolt's goal in every interaction is to make sure each person he speaks to leaves with the peace of mind they rightfully deserve


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