HMO vs. PPO: What’s the difference and what to consider about your care

With Medicare annual enrollment upon us, you may be seeing more HMO options available in your area. And among plan options, there is a lot to consider when it comes to quality of care, cost, and access to the health care providers you need to see.

Two of the most common types of health care plans are HMOs and PPOs. And there are significant differences between them, particularly in how they coordinate care through a primary care provider (PCP). 

What is an HMO plan?

HMO stands for “health maintenance organization,” and champions a focus on proactive, preventive care to help members stay healthy. Members choose a PCP as their health care “quarterback” to help guide care and connect them to the right services and specialists for their needs – ultimately helping to make managing health and costs easier.

HMO plans typically have lower costs than other plan types when members use doctors and facilities in the plan’s network – which could mean more value and fewer surprises.

Why is a PCP so valuable?

HMO plans tend to be better suited for those who want PCP-guided, coordinated care within a network of trusted providers. PCPs tailor care decisions based on your unique care needs and can guide you through the health system to care services and specialists as needed. Primary care coordination can support overall wellness and timely, safer, and more effective care.¹  This includes supporting chronic disease and medication management as well as behavioral health needs and nutrition.

Supported by the structure of an HMO plan, the PCP is more easily able to see the whole picture of your care, allowing them to provide more personalized and consistent member care. 

What is a PPO plan?

PPO, meaning “preferred provider organization,” has a network of contracted providers, though these plans also offer coverage for out-of-network care. These plans also typically allow you to book directly with specialists with no referral, and may be better suited for people who know which specific specialist they want to see and don’t mind paying more for this flexibility.

While PPOs may allow members to see providers outside of the plan’s network, they usually pay more than they would for the same service from a network provider and they will generally pay higher out-of-pocket costs, overall. 

The bottom line

Choosing between an HMO and PPO plan can impact your health care experience, your access to providers, and your wallet. Visit Medicare Made Clear® for information on different types of Medicare plans and other Medicare topics.