When you shop for a Medicare Advantage plan, most of your choices will be either an HMO or a PPO. The letters matter more than the extras on the brochure. They decide which doctors you can see, whether you need referrals, and what happens when you are away from home.
Here is the difference in plain terms, and how to tell which one fits the way you actually use health care.
The short version
- HMO: you use the plan’s network. Out-of-network care is generally not covered, except emergencies and urgent care. Many HMOs require a primary care doctor and referrals to see specialists.
- PPO: you can use any doctor who accepts Medicare and agrees to bill the plan. In-network costs less. Out-of-network costs more, but it is covered. Referrals are usually not required.
How a Medicare Advantage HMO works
HMO stands for Health Maintenance Organization. You pick a primary care doctor from the plan’s network, and that doctor coordinates your care.
- Network: you must use in-network doctors, hospitals, and labs. If you see an out-of-network doctor for routine care, you may pay the whole bill.
- Referrals: many HMOs require a referral from your primary care doctor before you see a specialist. Some do not, so check the plan’s rules.
- Emergencies: emergency and urgent care are covered anywhere in the U.S., in or out of network.
- Cost: HMOs often have lower premiums and copays than PPOs in the same county.
Some plans are HMO-POS, which means “point of service.” They work like an HMO but cover some out-of-network services, usually at a higher cost.
How a Medicare Advantage PPO works
PPO stands for Preferred Provider Organization. The plan has a network, but you are not locked into it.
- Network: in-network doctors cost less. Out-of-network doctors are covered at a higher copay or coinsurance, as long as they accept Medicare and agree to bill the plan.
- Referrals: usually not needed to see a specialist.
- Out-of-pocket limit: PPOs have two limits, one for in-network care and a higher combined limit for in-network and out-of-network care together.
- Cost: premiums and copays are often higher than an HMO’s.
One caution: an out-of-network doctor does not have to see you. Some offices will not bill a PPO they do not contract with. Call before you go.
Which one fits you
An HMO may fit if:
- Your doctors and the hospital you prefer are all in the network
- You are fine having a primary care doctor coordinate your care
- You stay close to home most of the year
- Keeping monthly costs low matters most to you
A PPO may fit if:
- You see a specialist or a hospital system that is not in the HMO networks
- You want to see specialists without referrals
- You split time between two places or travel for weeks at a time
- You are willing to pay more each month for flexibility
What people get wrong
Choosing on extras. A bigger grocery card or dental allowance does not help if your cardiologist is not in the network. Start with your doctors, then your drugs, then the extras.
Assuming a PPO means “anywhere.” It means anywhere that accepts the plan. For people who travel a lot or live in two states, Original Medicare with a Medicare Supplement plan may work better, because any doctor who accepts Medicare will take it. See the real difference between a Supplement and Medicare Advantage.
Forgetting prior authorization. Both HMOs and PPOs can require approval before certain tests, procedures, and hospital stays. Ask how the plan handles it.
Not checking the network every year. Networks change. A doctor who is in network this year may not be next year. See what to do when your doctor leaves the network.
How to check a plan’s network
- List every doctor, specialist, and hospital you use or want access to.
- Look each one up in the plan’s provider directory for next year.
- Call each office and ask: “Are you in network with this exact plan next year?” Use the plan’s full name, because carriers have several plans with different networks.
- Check your hospital, not just your doctors. If your surgeon is in network but their hospital is not, you have a problem.
Common questions
Are emergencies covered with an HMO when I travel?
Yes. Emergency and urgent care are covered anywhere in the U.S. Routine care away from home generally is not.
Can I switch from an HMO to a PPO?
Yes, during the Annual Enrollment Period from October 15 to December 7. If you are already in a Medicare Advantage plan, you can also make one change from January 1 to March 31.
Do HMO and PPO plans both include drug coverage?
Most do, but not all. Check that the plan includes Part D if you need it, and run your drugs through the plan’s list.
Let us check the networks for you
We check your doctors, hospitals, and drugs against the HMO and PPO plans in your county, at no cost. Use our doctor network check, take the Medicare Clarity Score, or call Scott at 512-844-3983.
We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options. Not affiliated with or endorsed by the federal government or the federal Medicare program.