Preferred Provider Organization
or Health Maintenance Organization? 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. 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
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.
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