Pros and Cons of HMO and PPO Plans


Oct 19, 2001


The Bottom Line There are pros and cons to both HMO and PPO plans. It is really up to the employer based on employee need to offer the plans that suit them best.

Even though HMO and PPO health plans may have the same administrative office, they are two completely different plans and awareness of how each plan works will determine how complicated your life may become in the future.

Being An HMO Member

First, I will describe the advantages and disadvantages of an HMO plan.

Advantages

HMO health plans have lower health premiums for both the employee and the employer. Because of the lower cost, these plans are very attractive and a significant amount of employees will choose them. Usually there are a wide selection of physicians and hospitals on HMO plans and employees feel that if they are able to get the current amount of health care at a substantially reduced price, then it benefits them.

Another advantage monetary wise in favor of HMOs is the fact that there is no deductible for the patient. The only thing that is required is the prescribed co-payment for services that may run between $15 and $20 a visit. In addition, the co-payment for outpatient and hospital services is substantially reduced as well in comparison to a regular PPO health plan.

Disadvantages

The main disadvantage for HMO plans is the fact that you can only go to a prescribed list of doctors. If your physician is not listed on the plan, then you will have to obtain special permission to pay a higher proportion of the cost of the office visit or you will have to pay for the entire treatment of that physician.

Another disadvantage for HMOs involves the use of specialists in the treatment of patients. For instance, my son has autism, and if I wanted to take him to his children’s neurologist (something he’s done for numerous years), I would have to contact my primary care physician to get a “referral” for me to bring my son. In my opinion, this is absolutely ludicrous. If I don’t get a referral (or even if the physician doesn’t get the referral from the insurance company), it is very likely that I will have to be faced with the fact that my son cannot see his doctor at the prescribed time unless I pay for the entire visit. When faced with the situation where a physician such as my son’s neurologist is booked up for months in advance, realizing when you finally get to the doctor’s office that your paperwork is not in order is not something that is very pleasant. There have been times where I have had to pay for the entire visit out of pocket because of the HMO’s alleged “losing” a referral.

In addition, if your regular physician drops from the HMO plan, then you will be faced with the prospect of trying to find another physician or pay a higher cost ratio for using the same physician. When a patient has developed a doctor/patient relationship for several years, is this really right for them to be forced to change or be punished?

Being a PPO Member

Before I moved to my new job, I thought PPOs were a waste of money. However, now that I am underneath a pretty good PPO, I have changed a lot of my thinking on this issue.

Advantages

The main advantage that I have found with being with a PPO plan is that I can have a wider array of physicians to choose for my health needs. This was critical when it came to my son’s choice of neurologist when I moved across the country. I wanted his current neurologist to hand pick who she wanted to take care of my son. Then I checked with my that physician to see what plans they were on. It was much easier for me to choose the PPO that I desired because of that.

Another aspect of having a PPO is that I do not have to “report” a primary care physician to the insurance company nor do I have to call a primary care physician for referrals to specialists. This was one of the things that truly irked me beyond belief, and the extra expense of paying for a PPO is worth it.

As I mentioned in a previous article, some of the language on the benefits plans of insurance companies is archaic and ambiguous. ( http://imzadi.epinions.com/content_2257297540 ) Because of this ambiguity, it is possible that in some instances, PPO plans may charge higher than normal copayments rather than what is specified on the plan IF the physician charges more than what is “reasonable and customary”. Therefore, it is important for employers to take a good look at PPO plans to make sure that they are going to perform the way they were originally designed – to have a deductible, a copay to maximum out of pocket each year, and then possible full payment after that has been reached.

Now What?

Because there’s such strong feelings both ways about HMOs and PPOs, I really believe that if possible it is in the best interest of the employer to offer both plans to their employees. Then the employees feel as though they are more in charge of their health care options and will feel more freedom to choose what they wish. I feel that if there are too many restrictions within these health care options to only offer one type of plan that it causes employees to feel less like they have the ability to control their lives, causing dissention with staff members.

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