PPO Health Insurance - HMO vs. PPO

PPO Health Insurance Plans
The Alternative to HMO?

PPO health insurance (Preferred Provider Organization) is very much like HMO health insurance. They are both ‘managed care organizations’…hence they take part in managing the healthcare for the insured persons. There are many similarities, and several differences.

How is PPO Health Insurance Similar to HMO?

PPO health insurance, like HMOs, form a network of doctors and medical providers. Those providers are contracted by the PPO to give a lower rate to insurance policy holders. They basically purchase healthcare at bulk rates and resell it…the Walmart of medical care. In this way, they pass the savings to customers. But the health care providers also benefit because of the huge market it brings them.

PPO health insurance providers, like HMO providers, also sometimes subject their network to ‘utilization reviews’. This is where the organization tracks medical care either in dollar amounts or in number of visits per patient. They use it to keep patients from receiving unnecessary treatment…not just to save money (although it does have this effect) but also for the safety of the patient. There are some doctors who would perform unnecessary treatment for money.

PPO health insurance providers also use the utilization review because it pulls statistics together to help identify afflictions. In this way, doctors with less experience come under the eye of ‘big brother’. Although, some people think of such limitations as an intrusion.

How is PPO Health Insurance Different than HMO?

PPO health insurance generally allows policy holders to visit any doctor within the network without a referral from their primary care physician. HMOs usually want a referral before an insurance policy holder can visit a specialist. As a matter of fact, with PPO health insurance, policy holders aren’t even required to choose a primary care physician.

PPO health insurance also (usually) handles patient billing a little differently. With PPO insurance policies, the patient often pays medical expenses and then is reimbursed. Sometimes the health provider invoices the PPO instead of the patient, but the responsibility to pay the invoice still rests on the patient, because treatments don’t require as much approval as they would with an HMO.

Another difference between PPO health insurance and HMO is that PPOs generally allow you to visit doctors and health care centers outside the network. Although, they try to discourage it by paying a smaller percentage of the bill. How much less differs from policy to policy. Some states even limit the percentage of decreased rates.

Is PPO Health Insurance Better than HMO?

This all depends on your situation. PPO health insurance can generally provide all of the benefits someone would need…including specialized services, even if someone has a chronic condition. Some people choose PPO health insurance because it has fewer restrictions. But fewer restrictions mean more money. PPO health insurance costs more than an HMO, and the benefit amounts are usually a little bit lower. Some PPOs require policy holders to pay a deductible. But to some, the money is well worth the added freedom.