When it comes to helping clients choose a Medicare plan, there are many types of plans to consider. Those clients leaning towards a Medicare Advantage plan need to understand Medicare PPO vs. Medicare HMO plans. Although both plan types provide comprehensive coverage, they differ in many ways including how the enrollee’s healthcare is managed, costs for care flexibility of providers used. In this blog, we’ll go over some benefits of PPO and HMO plans to help determine which option may suit your client’s needs best.
Medicare PPO Plans
Provider choice flexibility
Although Medicare PPO plans have a network of preferred providers, plan enrollees may opt to receive care from an out of network provider for a higher fee. PPOs give the enrollee the freedom to see any doctor or specialist they choose, without the need for a referral.
Costs
In general, PPO plans may have similar cost share amounts compared to HMO plans. These amounts vary by plan type, carrier and service area. However, PPO plans offer lower out-of-pocket costs if enrollees stay within the network. The flexibility to see out-of-network providers comes with the potential to pay higher out-of-pocket amounts for those services.
PCP (Primary Care Physician) requirement
Unlike HMO plans, PPO plan enrollees are not usually required to choose a primary care physician (PCP). They do not need to get a referral from a PCP before seeing a specialists or other healthcare provider.
Medicare HMO Plans
Restrictions
In general, the choice of providers in a Medicare HMO plan is more restrictive. Enrollees are required to use healthcare providers and facilities within the plan’s network, unless it is emergency situation. Those who opt to receive care from an out-of-network provider, may have to pay out-of-pocket for the full cost of services.
Lower Costs
HMO plans often have lower out-of-pocket costs compared to PPO plans. Although, the network of providers is limited, and enrollees must stay within the network to keep low costs.
PCP (Primary Care Physician) Requirement
HMO plans require enrollees to choose a primary care physician. Their PCP will manage their healthcare needs. If the enrollee wants to see a specialist, they must first obtain a referral from their PCP. This helps manage and coordinate care effectively but may be inconvenient for some people.
| Feature | Medicare PPO | Medicare HMO |
|---|---|---|
| Provider Flexibility | High – Can see any provider; higher cost for out-of-network care | Low – Must stay within network except for emergencies |
| Cost | Higher premiums; variable out-of-pocket costs | Lower premiums; generally lower out-of-pocket costs |
| Primary Care Physician (PCP) | Not required | Required; PCP manages your care |
| Specialist Access | No referral needed | Referral required from PCP |
Agents watch a quick YouTube video on strategies to manage the 2025 AEP
How to choose
The best choice differs from one person to the next and is based on individual healthcare needs and preferences. Both plan types have advantages and disadvantages.
Consider a PPO Plan if:
- The enrollee wants the flexibility to see any doctor or specialist without a referral.
- Higher costs are less important than the ability to choose any provider
- There may be a desire for out of network services, even at a higher rate.
Consider an HMO Plan if:
- Enrollees are willing to use a specific network of providers.
- They like the idea of a PCP managing and coordinating their healthcare needs.
- The enrollee does not see the need to use out-of-network providers and does not mind network restrictions.
Agents must consider the clients’ needs, budget and service area in order to find the best fit for their client.