The difference between Medicare HMO and PPO plans

Published by Medicare Made Clear®

Figuring out the difference between HMO and PPO plans

Medicare HMO (Health Maintenance Organization) plans and Medicare PPO (Preferred Provider Organization) plans are two types of Medicare Advantage plans. There are few differences between the two.

The main difference: Using the plan’s provider network

Medicare HMO and PPO plans differ mainly in the rules each has about using the plan’s provider network. In general, Medicare PPOs give plan members more leeway to see providers outside the network than Medicare HMOs do.

A provider network is a list of doctors, hospitals and other health care providers under contract with a health plan. Providers in a network agree to accept the plan’s payment terms for covered services, which helps plans manage costs. As a result, plans are able to share the savings with plan members through low out-of-pocket costs.

See the table below for how Medicare HMO plans and Medicare PPO plans set rules around provider networks.

Medicare HMO vs. Medicare PPO
  Medicare HMO

Medicare PPO
Must use network providers for covered services Yes No
Network primary care provider coordinates care Yes No
Referral needed for specialist care

Varies by plan


Medicare HMO plans and Medicare PPO plans may also have a few other differences too. Read about each plan type below to learn more.

Medicare HMO plans and provider network rules

Medicare HMO plan members usually have to choose a primary care provider (PCP) from the plan network. The PCP provides general medical care, helps plan members get the services they need and provides referrals to specialists like cardiologists or dermatologists.

While Medicare HMO plans may charge a monthly premium and a deductible, these costs may be quite low – even $0 in some cases. Members usually pay a copayment for covered health care services, after meeting any deductible.

Importantly, a Medicare HMO plan may not cover care received from providers outside the network at all. The plan member could be responsible for the entire cost.

Medicare PPO plans and provider network rules

Every Medicare PPO plan has a provider network. However, these plans also offer coverage for out-of-network care. In addition, PPO plan members may see specialists without a referral.

Medicare PPO plans may charge a monthly premium and a deductible. Members usually pay a copayment for covered health care services, after meeting any deductible.

While Medicare PPO plans may cover out-of-network care, plan members usually pay more than they would for the same service from a network provider.

Is a Medicare HMO or Medicare PPO plan right for you?

Now that you understand the key differences between a Medicare HMO plan and a Medicare PPO plan, take a look at your health care providers and specialists you see. Determine how each plan type would work for you and the medical professionals you see. Will you be able to see them still on an HMO? What about on a PPO? Also, look at how costs may vary for your providers and services between the two plan types.

Either plan is a good option but finding which one is best for you is based on your personal health and financial needs.

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