Preferred Provider Organization or Health Maintenance Organization? PPO vs HMO

PPO vs HMO

If you were ever under a group health insurance plan you might have seen these letters at the top of your insurance card: either HMO or PPO. You probably never thought much about the difference because you have always gone to the same doctor who generally refers you to someone else if he can’t solve your problem.

However, if you were in an HMO and you tried to go to a different doctor on your own, you may have received a quick education in the difference between HMO and PPO via your pocketbook.

A little history

Health Maintenance Organizations were initiated in 1971 by the Nixon administration in an attempt to control the rising costs of health care. The federal government provided grants and loan guarantees, and employers of 25 or more people were required to provide HMO coverage for their employees.

When an individual enrolled in the plan, he/she paid a flat co-pay to a primary care doctor, called a gatekeeper. This doctor was chosen from a panel of doctors who had agreed to take on extra patients and to charge a lower price. The doctor was discouraged from recommending specialists or other doctors unless the patient’s condition made such action necessary.

Making the choice

From the view point of a person looking for private insurance, the HMO and the PPO can both provide quality care. The difference is in the premium and in the restrictions. The HMO still requires that you have a primary physician; while most now allow you to see a chiropractor without a primary care doctor’s referral.

You cannot go to a specialist or to a doctor outside of the network, or you will have to pay more sometimes all of the bill yourself. As long as you stay in the network, however, you will have a flat co-pay at the doctor’s office, a set percentage of a hospital stay, and no deductible.

If you want freedom of choice, you will want to choose a PPO instead of an HMO. In the PPO, you are still part of a network, but you do not have an assigned primary care doctor, and you can go to any doctor in the list of providers.

You will have a co-pay at the doctor’s office and will probably have a deductible to meet before the insurance will pay anything. Additionally, your premium will be higher. Still, if you see a number of different doctors, you will probably be happier with the PPO.

PPO & HMO both easy to find

Private PPO and HMO insurance plans are plentiful. Nearly all of the major players offer both. Blue Cross Blue Shield claims to be more transparent than many other companies in the way the policies are written and in the terms of coverage.

Another extremely large, nationwide company is Aetna who seems to have more variety in the HMO policies as they offer many different HMO plans, all with different premiums depending on how high you want your co-pay to be at the doctor’s office.