My company is finally getting me health insurance, and I have a choice between an HMO plan and a PPO plan. Can anyone give me a reasonably concise list of the differences between the two, and any opinions on the strangths and weaknesses of them? I’ve tried a web search, but felt buried under too much info. Thanks.
In my experience these are the highlights:
HMO (Health Maintenance Organization)
You must select a “primary care physician” from their list of providers. If you have to see a specialist, you need a referral from your primary care physician to another doctor who is in their network. This is generally less expensive and less flexible.
PPO (Preferred Provider Organization)
You can go to any doctor you choose from the provider list (usually a bigger list than the HMO list) without a referral. In most cases you can also go to a doctor outside the network, but you will pay a larger percentage of the bill. This coverage costs more than HMO coverage, but gives you more flexibility.
Generally, I agree with FBG’s assessment. One added strength of my PPO (not sure if this applies to all of them) is that I can see an in-network specialist without a referral from my primary care physician, which saves me from having to make a visit copay to my PCP.
PPOs will also cover much more of your out-of-network expenses than an HMO; but the flip side of this is that you do pay a higher premium.
If you’re a generally healthy person who doesn’t need a lot of medical treatment, I think there’s nothing wrong with going for the HMO. However, I chose a PPO at my workplace because I have some big medical expenses and take prescription medicine that can be pricy. I also have to say that the customer service I experience with the PPO is far better than what I’ve experienced with HMOs.
I have CIGNA as my PPO, and the HMO I am most wary of is Kaiser Permanente.
HMOs are good for routine stuff, not so much for catastrophic, fantastic for pregnancy. Part of this is because of the basic nature of an HMO: You no longer control your access to health care, your insurance company does. Think of it this way: Health insurance is like a triangle. With an HMO that tria…hold on, I’ll diagram it. As you can see, HMOs are better for routine care, that was the whole idea behind them in the first place, more well care = less sick claims, so you have no or a very low deductible, low copays for check ups and basic sick visits, etc… The problem is the cost containment that’s inherent in the system, you don’t want to be waiting on the state insurance commissioner to tell your HMO to cover the surgery when you have cancer, or to have your HMO try and get the organ you need transplanted at a cheaper price, do you? That’s how your access to care becomes more and more limited as you travel up the triangle (need more and more care).
PPOs, on the other hand, usually have more of their costs up front; co-pays, deductibles, 80/20 coverage, etc… but once you satisfy an out of pocket maximum they cover you 100% (Out of pocket maximum (or OOP) is a generally meaningless term, in practical use it’s whatever the insurance company wants to pay because it’s only OOP of “approved charges” and the insurance company can decide to disallow anything they want, but we’ll use the term anyway, it’s all we got), plus because they eliminate gatekeeper physicians and the need for referrals, they’re easier to use for everything except routine sick visits and check ups.
As a general rule, I’d take a PPO over an HMO, but you have to chose for yourself based upon what’s important to you.
At least in our market, the major remaining differences between an HMO and a PPO are whether out of network services are covered and whether a given service requires a copay. or coinsurance and a deductible. We haven’t required the selection of a PCP (though we actively encourage it), nor required a referral for specialty care, for years. We do require preauthorization for inpatient admissions and certain elective procedures (those which tend to be abused).
In an HMO if you go to an out of network provider, it’s not covered at all (except for emergencies). In a PPO you can go to whomever you want, but going out of network can cost you a LOT more money. The “approved charges”, which Weirddave seems to suggest are somewhat whimsically established, are actually the contractual amount determined in advance between the carrier and the provider during contract negotiations. What is covered or not covered is not a matter of whimsy either… but virtually nobody reads the certificate of coverage which tells them, in advance, what is actually covered and what is not.
Our provider network is huge - we have all but three hospitals in the entire state,
and a provider-to-member ratio of 1:6. Our PPO members would typically be fools to go out of network because our network is so comprehensive. (Unless they must go to Cleveland CLinic or Mayo, for instance.) Whether the PPO model works for you depends upon your insurance company’s network and rules.
Also: I won’t begin to defend some of the abuses that some health insurers have committed, but please understand that there is plenty of abuse all around. The amount of fraudulent billing we receive from providers is simply amazing.
“Approved charge” amounts may be contractually negotiated, but if you think all services are automatically approved, you’re very much mistaken. I just got through helping a client who had 12K of a 15K bill for surgery disallowed by BCBS of MD, (including the anesthesiologist!?!! 
) She was forced to set up a payment plan that’s going to take her several years to complete, all of this with a plan that supposedly had an OOP of 2K. That was an OOP of 2K of approved charges, and all of the charges they disallowed did NOT count towards the OOP.
I don’t think that and I hope I didn’t say that.
Anesthesiologists are some of the absolute worst for helping put patients in this situation. It is a common practice, at least here, for hospitals to subcontract anesthesiologists who refuse to join some/most carriers’ provider networks, even though the hospital is part of that same network. Patients get stuck in the middle, because they quite reasonably assume that they’re utilizing a participating physician who has admitting privileges to the participating hospital. The anesthesiologists are perfectly positioned to take advantage of this. Our health plan ends up routinely covering the anesthesia bill because of the fairness issue, but we’re not necessarily always the bad guys in these circumstances.
I’m sorry to hear that. If it’s a par hospital with BCBSMD, the hospital should probably not be balance billing your client, though. Why didn’t the hospital check your client’s eligibility for this service before admitting her? It’s (at worst) a phone call. Perhaps they didn’t have your client’s best interests at heart either.
My username is not confidential enough for me to express how I think our health care system ought to really work. But the trend toward plans which assume that patients have perfect knowledge about their health care, so that they can make perfect decisions, is only getting worse: consumer directed health plans, HSAs, etc. With this administration in office and the GOP running congress, this trend will only become worse. I take a tool called ePocrates with me to my own check-ups, so that I can have at least some information (about pharmacy) available to me at the point of decision. This is a completely unrealistic assumption to make about how health care decisions are made for most patients, perhaps including your client.
I’ve worked for a Blues plan and have no intention of defending them. It was the worst place I’ve ever worked. But I can’t help but speculate that there is more than one way to look at your client’s disastrous situation.
Oh, I certainly hope so. Do you even know what a consumer driven health plan is? It’s the cure for everything you’ve been talking about; HSA’s are a very reasonable way to contain health insurance premiums, although the tax write offs are not as great as an HRA, at least they return some modicum of sanity to the HI field, taking it back towards what it is supposed to be, insurance, and away from the engorged entitlement program that is driving premiums through the roof.
As a medical biller, I’d have to agree pretty thoroughly with the descriptions as given before. Personally I tend toward PPO’s, but I have a few things that require me to see specialists and I don’t like having to go through a gatekeeper to get there.
Oh, and WeirdDave, what about the disclaimer that you have to listen to that explains that “precertification is not a guarantee of payment”, etc. We have problems with our patients and out-of-network anesthesiologists all the time, too. And they want US at the surgeon’s office to FIX IT NOW. Or pay it, or something. Believe me, if there was anything we could do about it, we would.
But going back to the OP, it really is a decision about not paying a lot out of your check & paying more when you need medical care (usually PPO) OR paying a lot out of your check & not having to pay as much when you need the care but having to jump through more hoops (usually HMO). That’s really what it comes down to.
Well, it all comes down to the insurance company, doesn’t it? Most companies look for every little loophole not to pay, some lay it all out before hand. Mine pays the anethesiologist a flat percentage of what the primary surgeon gets, regardless of network or not. Seems pretty fair to me.
My folks went from Secure Horizons to Kaiser and then to Blue Cross PPO with Medicare, and they are quite happy with the choices and not having to get referrals and make appeals.
I had Kaiser through work but chose to get out of it and pay for Blue Cross PPO.
Kaiser was okay for me but just not convenient, and waiting for an After Hours appointment meant hauling my sick self several miles for an 8pm session.
At least with BC, I can go to an urgent care nearby during daylight.
I don’t mind shelling out the extra dough. Oh, and I also have them for dental and have not had to pay anything at the office yet.
Yeah. I’ve even helped design a CDHP. And I’d be interested in knowing how your client would have fared if she had been a CDHP member in this situation.
I’m not going to take this further here - it’s too far from the OP. I’ll research what’s already out in Great Debates, and if CDHP and/or HSAs haven’t been already thrashed out, I’ll start a thread about them there.
That’s fine. If you do, send me a link or post the link here.
I sure was glad that I have a PPO after I got really sick earlier this week. I’m a healthy young person, and yeah it would have save me a nice bit of money every month to go with the HMO, but I knew better…
I developed a really bad and painful urinary tract/bladder infection. My regular doctor had no appointments, so she told me to go to the emergency room or urgent care center. I called my insurance company to make sure this was OK. They said, sure, you have the PPO, you can go anywhere you want! And it’s a good thing I went when I did because it was very serious! It would have been a HUGE hassle if I had the HMO.
Growing up and until my early 20s, I had the HMO Kaiser Permanente through my parents. They sucked. You never had any choice of doctor. You just saw whoever was available, which meant I hardly ever saw the same doctor. It took weeks or months to get an appointment. If you had an emergency, you had to go to their facility… which was 35 minutes away from our house.
For example, once my dad cut his thumb really badly on the lawnmower blade. It was a huge deep gash and would not stop bleeding. So we had to spend like 30 minutes on the phone with Kaiser while we begged for permission to go to the closest emergency room (which was like 5 minutes away) rather than their facility which was 35 minutes away.
Another reason I love the PPO: if I need to go to a dermatologist, urologist, gynecologist, whatever, I just go… I don’t need to make one appointment with my regular doctor, wait a few weeks for that, take off work to go, pay the copay, get a referral… then call the specialist, make another appointment, wait a few more weeks, take off work, go to the appointment, pay the copay… what a WASTE!
How well an HMO works for you depends a lot on who your primary care physician is. A significant number of HMO PCPs are extremely reluctant to ever refer you to a specialist.
A friend of mine’s 5 year old daughter started rubbing her right eye a lot. So he and his wife took her to their PCP. The guy looked at her eye, insisted there was no problem, and sent her home. They repeated this dance two or three more times, because it was clear that the girl’s eye was really bothering her. They finally asked for a referral and were shot down. So they went looking for another PCP. It took 2 months to get switched over and get an appointment. The new PCP found that the girl had a very serious eye infection that (he said) any idiot should have been able to diagnose. She’s now blind in her right eye.
About a year ago, my best friend’s husband got really sick. Nauseous all the time and exhausted to the point that he couldn’t work with any regularity. He went to see his PCP. The doctor’s answer? “Must be cancer. Come back for tests in a couple of weeks.” (!!!) When the cancer tests came back negative, the doctor said, “Must be all in your head,” and put him on antidepressants, and refused to run further tests. After battling with his HMO for six months, he changed to a PPO. He was able to see a specialist who figured out it’s a not-uncommon stomach problem. He got some meds and is now fine.
These aren’t the only “evil HMO” stories I’ve heard, but they’re the worst.
HMOs probably work OK for most people most of the time. But when you get a PCP who is more concerned with keeping costs down than serving patients well, it can really compromise the quality of your health care because your ability to get a second opinion–especially from a specialist–is severely limited.
If you’re planning to get the HMO, I’d talk to some people who already use it. Ask whether they’ve had trouble getting referrals. Ask if they like their PCP. It should help you get an idea of whether patient well-being is taken seriously, or sacrificed in the name of cost-control.
There are a lot of very broad brush strokes here, and thus a lot of misconceptions (at least in some marketplaces).
First, Kaiser Permanente is a staff model. This means that their physicians are employees of the local permanente Medical Group office. Thus Kaiser offers very little choice in physicians but can control costs very effectively. Kaiser in Ohio, for instance, has something like 400 physicians and services about 200,000 members. My plan has less members than Kaiser Ohio, but has 19,000 providers.
Second, the observations regarding the behavior of PCPs, Kaiser’s or otherwise, assume a physician compensation model, capitation, which no longer exists in most places in the US (at least not the capitation of PCPs… - carve-outs such as lab, mental health, etc., still may be part of a capitation arrangement). In a capitation arrangement, the health plan pays a fixed amount to the provider group or association for each member who has a PCP in that group/association. This shifts the financial risk from the health plan to the capitated entity. This model was carried to its most extreme in California; in some parts of the US the concept never took hold. Now it’s relatively rare (perhaps except for California - I’m not sure what’s happening out there anymore). Our PCPs have never had any financial motivation to behave in a way which keeps costs down…so they don’t.
Third, the requirement of a referral from a PCP to obtain specialty care has also been fading in recent years.
This post is strictly FYI - hopefully it helps.
I could not agree more, and I am a relatively young, healthy person. I did say earlier that Kaiser was okay for the most part, but I only saw my assigned doctor once in three years; the rest of the time it was PAs (who were great, but never the same one twice), or waiting all day to go to After Hours care.
I spent countless hours writing letters of appeal and grievance on behalf of both parents when they had (in)Secure Horizons. Too many delays, frustrations, denials, etc. With their PPo they are well cared for now, which is even more critical when you’re 78 and/or have had serious or chronic problems.