In this age of uncertainty and the ever-growing health issues; health insurance is one of the booming and much in need service. Keeping in view the market demand over the years, several plans have been designed over the years.
Managed-care plans refer to insurance plans; in which network of paramedical staff and the insurance providers are bounded by a contract according to which they offer insurance plans to the customers.
HMO and PPO are two of the most famous managed care insurance plans. At times many customers tend to confuse both the plans negating their differences.
HMO vs PPO
The main difference between HMO and PPO is that HMO restricts the use of services of the medical services within the network only while PPO puts in no such control. The premium charge of an HMO plan is towards the lower end in comparison to PPO where the cost of the premium is comparatively high.
The main objective of both of these policies is to provide the greatest possible health services both in terms of budget and eminence.
Comparison Table Between HMO and PPO (in Tabular Form)
|Parameter of Comparison||HMO||PPO|
|Full-Form||Health Maintenance Organization||Preferred provider organization|
|Type of Plan||Managed Care||Managed Care|
|Premium charged||Considerably Lower||Comparatively towards the higher end|
|Coverage provided||Within the network’s boundaries||Within and outside the vicinity of the network|
What is HMO?
Health maintenance organization- HMO; is one of the health insurance plans which falls in the category of managed care.
HMO is a relatively low-cost plan with a lesser premium. In this plan, the consumer selects a plan according to which a group of diverse medical staff and their expertise will help him in case of any medical problem.
Initially for an HMO to be functional, the consumer shall have to select a principal care physician. This will be the leading doctor, who will cater to the initial needs of the consumer, and will then refer him to the particular specialist from the assigned group only.
In case the insured considers the need of a specialist, he shall have to seek permission from the primary care physician before the checkup.
An HMO plan usually caters to the people who are available in the vicinity of the services.
HMO premium is considerably lower than that of other plans. This is because the paramedical staff and the other parties who provide services are paid a fixed amount of money beforehand.
The insured party on each visit, prescription, or test has to pay a single figure fee. Along with a yearly or monthly premium payment.
This plan is more motivated in providing preemptive procedures and the initial health care of its insured party.
What is PPO?
Preferred Provider organization-PPO is the most famous, managed care, health insurance plan. The insurance company has a contract for a fixed amount of money with networks of paramedics.
The insured party pays a premium to get access to a particular grid of such medical amenity. An insured party has the liberty to select any doctor from his network.
In this case, the insured party will select the service which they require and from whoever they wish to attain it from the group.
The PPO plan even supports and provides coverage in the instances where the insured party seeks medical help outside the network. The limit of external coverage is determined by the plans clauses.
The insurance company will then help in fixing an appointment and deciding on the fee as per their contract and the insured party’s coverage.
PPO usually charges a fixed amount of money for any medical visit performed by the insured party. At times a certain amount is also deducted from the total claim. Both these features along with a relatively high premium charge make it an expensive plan.
The large network range of PPO makes it a flexible plan as the insured party can take medical help within the domain of insurance whenever and wherever required.
Main Differences Between HMO and PPO
- In comparison, the premium of PPO is higher than that of HMO thus making it a more costly plan.
- HMO is a rigid plan which covers the cost of the use of facilities within the network’s bracket only; while PPO permits for the use of amenities from doctors outside the network.
- An HMO the original point of interaction for the insured party is the principal care physician whose recommendation is a must if one wants to get an appointment with a specialist; in PPO no such referral is required from any physician, making the entire network open for the insured party.
- An HMO the insured party has to bear a minimal expense of varied amount on every visit-the charges are determined by the——of the visit. While in PPO the insured party pays a fixed amount of charge on every visit performed.
- HMO operates within a limited locality within a network of confined service providers; while a PPO has a larger network operational at a larger scale at times covering numerous states and towns.
- Annual deductions from the total amount of coverage are a part of PPO whereas HMO has no deductions.
- HMO will not deliver any coverage if any person seeks medical help outside the setup while PPO will in most cases cover the disbursement of such a trip to the extent of the insured person’s coverage.
Recently managed care plans have gained a much positive reputation about the conventional insurance structures.
HMO and PPO plans fall under the same umbrella yet have some major differences. Therefore one should gauge their own needs and the extent of coverage and premium they can afford before making the final decision.