What are HMOs and PPOs?

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‘HMO’ stands for ‘Health Maintenance Organization’ while ‘PPO’ stands for ‘Preferred Provider Organization.’ Both are types of health insurances that many employees get as part of their company’s benefits package.  Some also get either type of health insurance through personal payments, enrollments, or subscriptions.

Both HMO and PPO allow for members to obtain various healthcare-related services offered by either network.  Depending on the details of the contracts, insurance members may have both inpatient and outpatient services.  Inpatient services are typically offered by member or accredited hospitals, and admissions are based on the doctor’s advice or the actual illness of the involved patient.  Outpatient services, meanwhile, may include coverage for doctor visits, laboratory tests, and other services that do not require patients to stay overnight at a medical facility.

The main difference between HMOs and PPOs is on the actual service provider or physician.  Under HMOs, members or insurance holders will need to consult with physicians that are accredited or part of the HMO network.  Services can only be obtained with accredited physicians, and other providers outside of the network are usually excluded.  Under PPOs, meanwhile, they allow members to choose a designated physician to obtain various services. The only concern is that some PPOs also have a network of accredited physicians, and when the service is obtained from those outside the network, the fees involved may be processed through reimbursement.  Fees and rates are also typically higher when service providers inside the network are chosen.  For so-called non-network, non-preferred providers, rates are paid much lower. These programs are to encourage plan holders to choose preferred service providers over those that do not belong to the network.   Depending on one’s preferences or what is being offered by employers, various medical services can be obtained using either HMOs or PPOs.  Premium rates also vary depending on the coverages and benefits.

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