Medicare provides different health care options to those who qualify: Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs). Both are privately managed health care systems that are paid by Medicare to provide quality health care services. Both strive to reduce health care costs by emphasizing preventive care and by managing the use of their medical services. Which type of health care plan best suits you depends on your health care needs and preferences. Medicare programs differ from state to state, and even within states Medicare may offer different HMO and PPO options that vary across policies. To make an informed choice between plans, you should understand their respective advantages and disadvantages as well as research the options in your state.
HMOs
HMOs are insurers that financially manage health care systems as well as provide the health care services. Medicare HMOs provide prepaid health care treatment. Members pay a fixed amount each month whether they use the services or not. Medicare HMOs provide a full range of medical services for this monthly fee, including doctor’s office visits, certain diagnostic testing, surgery and hospital visits.
Once you join an HMO you choose a primary physician from a list of enrolled providers. This physician is your first point of contact for all services and serves as a gatekeeper who must approve of any further consultations with specialists. HMOs provide all services that Medicare covers, but Medicare will only pay for services rendered by providers within the HMO network.
Advantages of HMOs
HMOs offer several advantages over PPOs according to Agency Info. Out-of-pocket costs are usually less, especially for members who have significant or chronic health issues that require extensive, ongoing treatment. HMO members have a fixed monthly payment, but do not have extensive additional fees in any given month even if they make considerable use of basic medical services. HMOs try to reduce accumulative costs of medical care by focusing on preventive care and health maintenance. Many HMOs provide free health education programs. Medicare HMOs usually require only a nominal co-payment for most services, and do not place a lifetime limit on benefits. You will receive treatment as long as you are enrolled in the HMO.
Disadvantages of Medicare HMOs
Your primary care physician must approve of any referrals to specialists and can, therefore, -limit access to specialists by not providing the referral you may feel you need. HMO members must obtain treatment only from HMO providers, except for emergencies. Emergencies may be strictly defined, and usually non-HMO providers will be covered only when the member utilizes services while traveling in an area where HMO providers are not available. Members should inquire with their Medicare HMO before utilizing emergency services rendered by non-HMO providers.
PPOs
A Medicare PPO is a group of providers including doctors and hospitals that provide medical services to members at a discounted rate. The PPO insurance policy and particular providers employ service control programs to limit the services and accumulative costs of the medical services.
Members pay for services as they use them. The PPO pays a portion of the doctors’ and hospitals’ fees, while the members pay a co-payment. The price of particular services and the amount of the co-payments are predetermined and regulated by contract between the providers and the PPO.
Advantages of PPOs
Medicare PPOs provide a greater choice of physicians than do Medicare HMOs. Members may choose to go to any physician they want; however, reimbursements for in-plan providers usually are much higher than for out-of-plan providers. For example, members may have only a 10 percent co-payment when they use in-plan providers, but must pay as much as 50 percent when using out-of-plan providers. Out-of-pocket expenses such as deductibles and co-payments are typically limited. Annual in-network limits usually are around $1200 for individuals, while out-of-network limits are typically around $2000, according to Agency Info.
Disadvantages of PPOs
PPOs have larger co-payments than HMOs and usually require you to pay a deductible. There may be more paperwork involved, especially if you see providers who are out of network.
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