Compare and contrast whether you feel and Health HMO is better than PPO for HI (health insurance).
Introduction
Choosing one’s preferred health insurance plan may be a daunting task. This is because of the number of confusing terms used in both cover options. However, there is one main difference between a Preferred Provider Organization (PPO) and a Maintenance Organization (HMO) (David and Rochet 2). With an HMO, one is able to have access to doctors only within the hospital network of the HMO. This is because HMOs contract with healthcare facilities and professionals to form a “provider network” (David and Rochet 2; Bihari n.p). For the PPO, on the other hand, one is able to have access to any doctor of their choosing (even outside the network) as well as greater coverage for particular providers (hospitals, doctors and other providers) who have a formal contract with the PPO (David and Rochet 2). Even though this is the main difference between HMOs and PPOs, there are other points of divergence or convergence which would make me prefer the HMO plan better than a PPO health insurance plan.
The first reason why I would prefer an HMO plan to a PPO plan is because of the better costs in HMO as compared to PPO (Medicalmutual.com n.p). There is a major difference between the two health insurance plans in terms of how pricing and discounts are arrived at. The fact that in the HMO arrangement, one may receive health insurance cover through the HMO network of healthcare providers, hospitals and doctors means that the HMO receives more patients under their contracts with healthcare facilities and professionals (Bihari n.p). The arrangement is that the healthcare facilities and professionals who have entered into a contract with the HMOs are to bring many patients provided the HMO offer services at discounted prices. In the long run, the contractual arrangement enables the HMO to charge monthly premiums which are comparatively low and more favorable to the subscriber (Medicalmutual.com n.p). This is a marked advantage as compared to indemnity insurance as long as members of the plan follow the extra restrictions (Bihari n.p). For PPOs, discounts are offered if the subscribers to this plan use the healthcare facilities and professionals within the network (Medicalmutual.com n.p). However, subscribers may also have access to provision of healthcare outside of the network but at an extra fee (Medicalmutual.com n.p). This implies that the PPO covers a greater portion of the healthcare cost if a preferred provider is selected and less if a non-preferred provider is selected. The PPO plan is quite restrictive and, therefore, not favorable.
The second reason why I would prefer a HMO health insurance plan over a PPO plan is because of the manner in which filing of insurance claims is done (Bihari n.p). Granted, subscribers in either of the two networks do not have to file claims so as to get paid provided they remain in their networks while seeking healthcare services (Bihari n.p). If PPO subscribers seek services outside the network, however, they are at a disadvantage as compared to HMO subscribers (Bihari n.p). To explain this, all the providers within the HMO network have to file a claim so as to get paid. This implies that the subscriber does not have to file a claim so as to get paid. In addition the subscriber’s healthcare provider cannot charge the subscriber directly or send them a bill (Bihari n.p). For PPOs, the subscriber who seeks healthcare services within the PPO network does not have to file a claim for reimbursement to occur (Bihari n.p). However, the PPO subscriber who seeks healthcare services outside of the network may has to cover the cost of the provider fully before filing a claim with their PPO for reimbursement (Bihari n.p). This means that the money received as reimbursement, more often than not, is used to cover part of the bill. The subscriber is, therefore, responsible for the payment of any portion of the doctor’s charge not covered by the PPO (Bihari n.p).
Despite preferring a HMO plan to a PPO plan, a HMO plan is quite inflexible as compare to a PPO plan. This is quite evident when it comes to the need for a Primary Care Physician (PCP) and ability to consult a specialist while within the plan (Bihari n.p). In this regard, the HMO is far less flexible as compared to the PPO. For the HMO, it is mandatory that the patient must have a Primary Care Physician (PCP) (Bihari n.p). The HMO does not provide cover if the subscriber does not have their own PCP. For PPOs, however, the subscriber does not need to have a PCP (Medicalmutual.com n.p). This is because they have the flexibility to receive healthcare from a doctor of their own choosing. However, this flexibility (for non-preferred doctors) comes at an extra charge (Medicalmutual.com n.p). When it comes to seeing a specialist, a subscriber in the HMO plan needs a referral from their PCP so as to access a specialist (like surgeon or cardiologist) with the exception of emergency situations (Medicalmutual.com n.p). In addition, the subscriber’s PCP is also restricted to referrals within the HMO network. For the PPO, the subscriber does not need to have a referral for them to consult a specialist (Medicalmutual.com n.p). In some cases, however, specialist will only see those patients referred by a primary care doctor. Approval is also required for some costly services like MRIs (Bihari n.p). The flexibility of the PPO plan in this regard, however, may be overshadowed by the fact that it comes at an extra cost (Bihari n.p). This is a point one needs to consider when thinking about flexibility.
Another advantage of HMOs over PPOs is in charges in the network (Medicalmutual.com n.p). For HMOs, the only charges that subscribers incur for services received within the network are copayments for services like prescriptions, procedures and visits by healthcare professionals (Medicalmutual.com n.p). On the other hand, some PPOs charge annual deductable fees for services received whether within or outside of the network (Bihari n.p). This implies that a PPO subscriber ends up paying more annual fees than the equivalent HMO subscriber.
Conclusion
I would prefer a HMO health insurance subscription as compared to a PPO subscription because of a number of reasons. First, HMOs offer services at discounted prices and their monthly premiums are low (Medicalmutual.com n.p). PPOs cover a greater part of the costs if a preferred provider is selected but less if a non-preferred provider is chosen, making them quite restrictive as compared to HMOs. Secondly, PPO subscribers who seek services outside the network are at a disadvantage as compared to HMO subscribers (Bihari n.p). A PPO subscriber who receives health services outside the network meets the full cost of the service first and has to claim for reimbursement from the PPO later. In addition, the PPO might not always pay for the full amount of the cost (Bihari n.p). The annual deductable fees charged by PPOs also make the total annual costs high as compared to those charged by HMOs. This makes HMOs preferable in this regard.
Work Cited
Bardey, David, and Jean-Charles Rochet. "Competition between HMO and PPO: A Two-Sided Market Approach." Health Affairs 3.2 (2009): 1-17. Print.
Bihari, Michael, and MD. "HMOs vs. PPOs – What Are the Differences Between HMOs and PPOs?" Health Insurance at About.com-Helping You Understand Your Health Plan. Version 1. Health insurance, 15 Apr. 2010. Web. 19 Oct. 2013. <http://healthinsurance.about.com/od/understandingmanagedcare/a/HMOs_vs_PPOs.htm>.
Medicalmutual.com. "Types of Health Insurance Plans: HMO versus PPO." Medical Mutual. Version 1. Medical Mutual, 1 Jan. 2013. Web. 19 Oct. 2013.
<https://www.medmutual.com/For-Individuals-and-Families/Health-Insurance-Education/Health-Insurance-Basics/Types-of-Insurance-Plans.aspx>.
