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Health Insurance Basics

Understanding Medicare Advantage: HMO and PPO Plans

December 19, 2018
Medicare Advantage plans — also called Medicare Part C — can offer Medicare participants options that aren’t available under traditional hospital (Part A) and medical insurance (Part B) plans. So, while all Medicare Advantage plans have to include coverage equal to Original Medicare, many also include prescription drug coverage, wellness and fitness programs, and/or dental, hearing and vision benefits. 
 
What Are Medicare Advantage 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.
 
HMOs vs. PPOs — Important Differences
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.
Frequently Asked Questions
What do these differences mean for you? The answers to these questions could help you decide whether an HMO or PPO is best for you.
 
Q: Is there a cost difference between HMOs and PPOs?
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.
 
Q: If I already see doctors or specialists who aren’t in an HMO’s network, will the HMO cover those costs?
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.
 
Q: Can I get prescription drug coverage under an HMO or PPO?
A: Yes, most Medicare Advantage HMOs and PPOs offer Medicare Advantage Prescription Drug plans as part of their plan benefits.
 
Q: Will I have to manage my claims?
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. 
 
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Anthem Blue Cross and Blue Shield is the trade name of: In Colorado: Rocky Mountain Hospital and Medical Service, Inc. HMO products underwritten by HMO Colorado, Inc. In Connecticut: Anthem Health Plans, Inc. In Georgia: Blue Cross Blue Shield Healthcare Plan of Georgia, Inc. In Indiana: Anthem Insurance Companies, Inc. In Kentucky: Anthem Health Plans of Kentucky, Inc. In Maine: Anthem Health Plans of Maine, Inc. In Missouri (excluding 30 counties in the Kansas City area): RightCHOICE® Managed Care, Inc. (RIT), Healthy Alliance® Life Insurance Company (HALIC), and HMO Missouri, Inc. RIT and certain affiliates administer non-HMO benefits underwritten by HALIC and HMO benefits underwritten by HMO Missouri, Inc. RIT and certain affiliates only provide administrative services for self-funded plans and do not underwrite benefits. In Nevada: Rocky Mountain Hospital and Medical Service, Inc. HMO products underwritten by HMO Colorado, Inc., dba HMO Nevada. In New Hampshire: Anthem Health Plans of New Hampshire, Inc. HMO plans are administered by Anthem Health Plans of New Hampshire, Inc. and underwritten by Matthew Thornton Health Plan, Inc. In Ohio: Community Insurance Company. In Virginia: Anthem Health Plans of Virginia, Inc. trades as Anthem Blue Cross and Blue Shield in Virginia, and its service area is all of Virginia except for the City of Fairfax, the Town of Vienna, and the area east of State Route 123. In Wisconsin: Blue Cross Blue Shield of Wisconsin (BCBSWI), underwrites or administers PPO and indemnity policies and underwrites the out of network benefits in POS policies offered by Compcare Health Services Insurance Corporation (Compcare) or Wisconsin Collaborative Insurance Corporation (WCIC). Compcare underwrites or administers HMO or POS policies; WCIC underwrites or administers Well Priority HMO or POS policies. Independent licensees of the Blue Cross and Blue Shield Association. Anthem is a registered trademark of Anthem Insurance Companies, Inc. 
 
This information is not a complete description of benefits. Contact the plan for more information. Limitations, copayments, and restrictions may apply. Benefits, premiums and/or co- payments/co-insurance may change on January 1 of each year. You must continue to pay your Medicare Part B premium.
 
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