Choosing the right health insurance is a complex decision involving several factors. You have to think about premiums, deductibles, copayments, coinsurance, provider choices, and in-network as well as out-of-network coverage. Out of the various types of insurance plans, Preferred Provider Organization (PPO) plans and Health Maintenance Organization (HMO) plans are two of the most common models. While both have their benefits, in this post we want to zoom in on some of the reasons why a person might choose a PPO over an HMO plan.
Note: If you’re looking for a more general discussion of the major plan types and their benefits, read our most popular post, How to Choose a Health Insurance Plan That’s Right for You.
PPO plans offer greater flexibility.
Firstly, flexibility in choosing healthcare providers is a defining feature of PPO plans. Unlike HMOs, which require members to select a Primary Care Physician (PCP) who coordinates all their healthcare services, PPOs allow direct access to any in-network provider. This freedom can be especially beneficial for individuals with chronic conditions that necessitate seeing different specialists regularly.
Furthermore, patients on PPO plans don’t need referrals from a PCP to see a specialist, unlike those on most HMO plans. This advantage means fewer bureaucratic hoops to jump through, which can lead to quicker access to specialized medical attention. For those with conditions requiring immediate or frequent specialist care—for example, if you often see a therapist, chiropractor, or dietitian—this autonomy and speed can be vital.
PPO plans offer better out-of-network coverage.
PPOs also typically offer more substantial coverage for out-of-network services than HMOs. Although the out-of-pocket costs might be higher, this aspect can be a game-changer for people living in rural areas with fewer in-network options, or for those who travel frequently and want the peace of mind that comes with broader coverage. And like we said before, this benefits patients seeking a high amount of specialized care, because many specialists choose to remain outside of all insurance networks.
PPO plans are also more generous when it comes to defining what kind of care can be reimbursed. Something like an out-of-network exception (or gap exception), where your insurer reimburses you at an in-network rate for out-of-network care, is much harder to obtain under an HMO plan than a PPO. This is because HMO plans have a strict border around their networks, so there’s less leeway for negotiating prices. If you go out of network with an HMO plan, you’ll have to pay for it.
PPO plans tend to have bigger networks.
PPOs also tend to have larger networks than HMOs. The broad range of healthcare providers within a PPO network ensures a higher likelihood that the preferred doctor or hospital is in-network, reducing costs and facilitating convenient and familiar care. This expansive network becomes even more crucial when dealing with rare diseases or conditions, where the expertise of specialized practitioners is required.
Many patients are comfortable with a small network. If you are a young, healthy individual who only expects to see a primary care physician and not much else, then you can save money with an HMO plan. But if you want to shop around for your medical care and have a greater set of options for nonstandard care like physical therapy, counseling, acupuncture, and more, PPOs are worth exploring.
OK, so what’s the catch?
A PPO's advantages do come with higher out-of-pocket costs compared to HMO plans, making it less desirable for those on a tighter budget. PPOs typically involve higher premiums, deductibles, and copays, and require a certain level of financial readiness from their members. Nevertheless, for those who can afford it, the extra cost is often seen as a worthwhile trade-off for the increased flexibility and coverage breadth.
Do doctors prefer HMO or PPO?
The preference between HMO and PPO plans can vary among providers based on a number of factors. On the one hand, PPO plans typically allow doctors more autonomy in terms of the services they provide and the treatments they recommend. They may also reimburse at higher rates compared to HMO plans. The larger networks associated with PPO plans could mean a broader patient base, which can be advantageous for doctors and their practices.
On the other hand, some doctors may prefer HMO plans because they often have a simpler billing structure which can reduce administrative overhead. HMOs operate on a model where primary care physicians are gatekeepers to specialist services, which could mean a steady flow of referred patients within the network. Furthermore, HMO contracts could provide a level of predictability with regular patients, streamlined services, and more consistent revenue.
However, these arrangements come with their own drawbacks. HMO plans might involve more bureaucracy and can limit doctors' ability to practice medicine as they see fit due to stricter guidelines on treatment protocols. So just as with patients, providers who prefer a greater degree of flexibility tend to prefer PPO plans.
Lastly, it's worth noting that the preference could also depend on the specific contracts a doctor or a healthcare provider has with an insurance company, which can vary widely. It's not uncommon for a doctor to accept multiple types of insurance plans, including both HMOs and PPOs, to serve a broader patient base and balance the pros and cons of each. Therefore, the preference between HMO and PPO can be highly individualized among doctors and often depends on factors such as their practice's administrative capacities, financial structure, and patient demographics.
Is a PPO plan right for me?
Lastly, it's crucial to consider personal health needs and lifestyle. A young, healthy person who doesn't require frequent medical care might opt for an HMO to save on costs. However, someone with complex healthcare needs, a preference for more control over their healthcare decisions, or a lifestyle that demands extensive geographical coverage might find a PPO more suited to their requirements.
The decision to choose a PPO over an HMO largely depends on the individual's needs and circumstances. The flexibility, extensive coverage, and ease of access to specialists make PPOs an attractive choice for those who prioritize these elements and are willing to pay a premium for them.
While cost is a significant consideration, it’s important to remember that health insurance, in many ways, is an investment in personal wellbeing, peace of mind, and the ability to deal with unforeseen medical expenses. PPO plans, despite their higher costs, provide a level of flexibility and freedom that many people find valuable in managing their health.
One should also consider the complexity of the plan. PPOs might be more complicated to navigate due to their flexibility, with differing costs for in-network and out-of-network services, varying levels of coverage, and potential balance billing from out-of-network providers. Yet, for people comfortable with navigating these complexities, the benefits outweigh the cons.
Where does SuperDial come in?
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About the Author
Harry is passionate about the power of language to make complex systems like health insurance simpler and fairer. He received his BA in English from Williams College and his MFA in Creative Writing from The University of Alabama. In his spare time, he is writing a book of short stories called You Must Relax.
