Difference Between HMO and PPO

Difference Between HMO and PPO

Health is of utmost importance to everyone. Who wouldn’t want to have a fun-filled life that is not interrupted by diseases of all kinds? It’s exciting to note that, but only a few people can afford the medical costs when ailments start knocking at the door. Indeed, the notion that “the treatment of an ailment is exclusive to those that could afford it” is not out of place because only a few privileged persons can afford quality medical care.

Therefore, the implementation of HMO and PPO came at the right time. Both medical concepts, though distinct in their functionalities, aim at offering quality healthcare to different classes of people. With that, patients can be confident of not breaking the bank anytime they get ill. So, without much ado, we would delve into the underlying concepts. With their specific clarifications, it would be easier to answer the all-important question: What is the difference between PPO and HMO?

Definition of HMO

To kick off this comparison, it’s essential to look at the meaning of HMO. The first note is that it is under the varieties of insurance providers that are categorized under the Health Insurance Marketplace. Generally, health insurance is a pool of different health insurance providers that come together to provide flexible healthcare services for the betterment of the target audience or patients.

Essentially, HMO stands for “Health Maintenance Organization”. It is a medical scheme that offers various healthcare services. These services are provided and facilitated by the network of physicians and healthcare professionals that are registered under the system. Ideally, the services offered herein are exclusive to the members registered in it.

Worthy of note is that its structure involves the provision of specific health insurance coverage to the members for a monthly or an annual fee. Besides, the services offered under this category are limited to the medical aid that members can get from the partnered doctors and physicians. Otherwise, patients or members of the contract may have to seek express permission (at additional costs) to get more healthcare services. Interestingly, the difference in HMO and PPO came to limelight as a result of unending calls for healthcare providers to review their premiums.

There are other fantastic features in HMO, and we would try as much as possible to point them out in due course. The first is the structure, which is either a public or a private entity. No matter the structure, the role of the organization in charge is to ensure the provision of primary and supplementary healthcare services to the subscribers or patients. The organization does that through the strategic partnerships it has with various healthcare service providers, including but not limited to specialists, physicians, and clinics.

Once the organization overseeing the affairs of the health services collaborates with the aforementioned healthcare providers, it then proceeds to reach a consensus with them on the amount tenable for the contract. This is usually the case because the organization is working towards the reduction of the out-of-pocket expenses for the subscribers. So, agreeing and paying the agreed fee is a way to give the members/subscribers access to quality healthcare services at affordable prices.

Now, are still trying to figure out the difference between PPO and HMO? We would even get to that, but you have to note some points. The first is that the healthcare professionals under this scheme are mandated to provide healthcare services to the subscribers in line with the program’s stipulations. Also, the organization may go the extra mile to offer additional services like the provision of self-funded healthcare structure, and the coverage of subscribers/members’ emergencies.

Definition of PPO

When it comes to the selection of quality healthcare, the tides always tend to fall on the disparity. For those who still search difference HMO PPO, you will be absolutely delighted after reading this piece. Now, getting to the second segment of the guide, there is no doubt at all that we have made some progress.

On the other hand, Preferred Provider Organization (PPO) is a health insurance program that returns the control of healthcare services to subscribers or users. In that instance, it is structured in a way that the users determine the healthcare providers that attend to their needs. Well, that implies the offering of a moderate amount of freedom for users/subscribers to choose the healthcare providers. While that is exciting, specific amounts of dexterity must also be exercised. For instance, the subscribers would have to pay additional fees when they opt for the non-PPO or the out-of-network healthcare option.

Going forward, it is important to note that we haven’t lost sight of the question: What is the difference between an HMO and a PPO? However, it’s essential to explain the alternative program in detail. With that being said, notable among this program is the fact that firms managing the entire system may have direct synergy with healthcare professionals. In this instance, the organization becomes the bridge between the subscribers and the healthcare professionals.

Also, the organization could take it further to bring in a third-party administrator or an insurer to forge an agreement between it and the healthcare providers. With that, healthcare services would be offered to the subscribers/users at subsidized rates.

What is the difference between HMO and PPO? We will get to that shortly. Look, you should also note that the providers under this arrangement negotiate the healthcare fees with the healthcare providers. In such a case, an affordable fee is agreed on and would then be used in calculating the out-of-network services/claims. The implication is that the exceeding of the out-of-network services might imply that its subscribers would foot the bills. Therefore, in line with the subsidized rates, the insurers would then be paying specific fees to the service providers for them to gain access to the services under this scheme.

HMO vs PPO Comparison Table

By now, you should have in-depth knowledge of the two programs. With that in mind, you may want to have to proceed to answer the mind-boggling question. Below, we have tabulated the answer to the question.

Basis of Comparison HMO PPO
Meaning This is a medical scheme where the subscribers are mandated to pay specific fees on a monthly or an annual basis to the organization in charge of it This empowers patients to pay the fees at once, or each time they want to access medical care
Choice of Medical Professionals Here, patients are not allowed to choose medical professionals.   Instead, the organization in charge choose the network or healthcare professionals that would be under the network to offer healthcare services to the usersUsers are allowed to choose their preferred healthcare providers
Out-of-Network Coverage The non-support of out-of-network healthcare coverage makes all the difference. Basically, if patients must go for it, then they must pay all the bills This allows the subscribers to opt for out-of-network coverage. However, that is subject to some conditions. Also, users may not pay if the fees of the non-PPO healthcare schemes are within the same ambient as their subscription. Otherwise, the firm would encourage them by paying part of the bills
Costs This doesn’t offer out-of-network coverage but has lower-premium packages It offers higher premium plans because of the flexibility and vast trade-offs that it provides
Prescriptions The limited coverage under this program also implies that the pharmacy spread would be sparseIt has higher coverage, covering the nooks and crannies of its jurisdiction

Conclusion of the Main Differences Between HMO vs PPO

From the foregoing, it is crystal clear that the two concepts share lots of striking semblance, but not without a few discrepancies as shown in the table above. With all intent and purposes, the difference between HMO and PPO is seen often in the costs, choice of medical professionals, and the prescriptions.

Are you unsure of the right one to settle for? Well, you need to define the type of medical or healthcare plan you need before selecting any of them. That is because the primary reasons for choosing either of them somewhat depends on factors, such as convenience, costs, and patient’s preferences. Therefore, you may want to go for HMO if you’re looking for an affordable healthcare plan or go for its alternative arrangement if you’re looking for freedom of choice and flexibility to select your preferred healthcare providers.

In all, both plans are hassle-free methods of getting quality healthcare services. There’s no standard rudiment for choosing a better alternative. So, study the features and differences, as highlighted in the article to make an informed decision. At this point, we played dissected the disparities between the two schemes. Before now, you were probably wondering: What is the difference between HMO and PPO? After reading this well-researched guide, we firmly believe that you don’t have ponder over their discrepancies.