Understanding Medicare Advantage: HMO and PPO Plans

Medicare Advantage plans are available from private insurance companies that have been approved by the Centers for Medicare and Medicaid Services (CMS). These plans must follow CMS rules and cover all services included in Medicare Parts A and B. Some of these plans are available at no additional cost beyond your standard Part B monthly premium, while others do require an added payment. Deductibles, copayments and coinsurance may apply for some covered services.

Also, with Medicare Advantage plans:

• You may need to use the care providers in your plan, often referred to as in-network providers, for lowest-cost service.
• You won’t pay more than what Original Medicare charges for services that include chemotherapy, dialysis and skilled nursing facility care.
• Your annual out-of-pocket costs will be capped, which isn’t the case with Original Medicare.

Most Medicare Advantage plans are structured as HMOs (health maintenance organizations) or PPOs (preferred provider organizations). If you’re interested in a Medicare Advantage plan, you’ll want to understand the difference between HMOs and PPOs, in both the care they cover and their costs.

Both HMOs and PPOs develop networks of hospitals, doctors and service providers to keep your costs down. The biggest difference between these plans is in the flexibility they offer to see doctors or other care providers outside their plan.

• HMOs usually require consumers to have a primary care physician (PCP) who acts as a care coordinator. Seeing specialists or other providers typically requires a referral from your PCP, and those referrals are usually restricted to others within the HMO network. If you choose to see a doctor or other health provider outside of that network, you will likely be responsible for higher costs.
• Most PPOs do not require you to have a PCP, and you can make an appointment directly with any specialist you choose. However, your costs will usually be lower if you choose care providers within the PPO’s network — seeing a doctor outside of that network will likely mean a higher fee and a separate deductible.

• Anthem MediBlue HMO
• Anthem MediBlue PPO

What do these differences mean for you? The answers questions could help you decide whether an HMO or PPO is best for you.

A: Because HMO consumers are required to use hospitals and service providers within the HMO’s network, they usually pay lower premiums. Out-of-pocket costs also can be lower with an HMO.

A: Not likely, HMOs typically don’t cover out-of-network services unless there is a true medical emergency. PPOs allow more flexibility, but your copayment/coinsurance will be higher and under a separate deductible.

A: Yes, most Medicare Advantage HMOs and PPOs offer Medicare Advantage Prescription Drug plans as part of their plan benefits.

A: Because HMOs are a closed network, you generally won’t have to file your claims with an HMO Medicare Advantage plan. If you have a PPO plan, you might have to pay out-of-network providers directly and then file a claim for reimbursement.