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What is the Difference Between a HMO and PPO?

Tricia Christensen
Updated Mar 03, 2024
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A health maintenance organization (HMO) and a preferred provider organization (PPO) have several differences such as which doctors patients can see, how much services cost, and how medical records are kept. The most significant difference between the two organizations is the option to select health care providers. As its name implies, a preferred provider organization allows a patient to select any health care provider, inside or outside of the network, while a health maintenance organization usually requires a patient to select a primary care provider who can give referrals to other medical specialists.

Choice of Health Care Provider

The PPO offers choice and flexibility, but is often more expensive. With a PPO, patients can see any doctor they wish, or visit any hospital they choose, usually within a preferred network of providers. One does not have to designate a primary care physician, and one can usually see any specialist without referral.

Conversely, an HMO requires that patients see only doctors or hospitals on their list of providers, and in addition, patients must choose a primary care physician who will direct care and refer patients to approved specialists. This type of organization offers fewer choices and may make changing doctors or seeking second opinions more difficult. Generally, the HMO will not, without prior approval, cover medical expenses incurred by seeing someone who is not contracted with the HMO, but usually will have defined coverage for emergency medical care when patients travel outside the normal coverage area.

A few exceptions exist: a large HMO like Kaiser Permanente may allow patients to use hospitals or specialists that perform a service that their contracted doctors and facilities don’t provide. Unless the health situation is an emergency, obtaining services like these usually involve approval processes and may require a great deal of paperwork and red tape.

Cost Differences

Depending upon the PPO's terms of coverage, a doctor or hospital outside the preferred provider list will cost more than those in the network; the organization will typically pay a range of 70 to 80 percent of accrued expenses, with the patient paying the remaining balance out-of-pocket. HMOs generally have a set cost for each service, which makes it easy to plan ahead for medical costs. Often, a set percentage of the bill will be paid by the organization, and once a specific deductible has been met, the patient is required to pay the remaining balance with their own money.

Medical Records

When a patient chooses a primary care provider with an HMO, medical records are kept together within the organization. Accordingly, when a patient is referred to a different provider, any related medical records are usually automatically forwarded to the new facility. While a preferred provider organization allows patients to choose providers in or out of the network, it does not store medical records in one place, which can can mean that a patient may spend more time trying to get medical records transferred.

Choosing an Organization

Frequently, employees are not really given a choice as to what insurance they can get as their company will only offer one or the other. When given a choice, they can usually choose between the health maintenance and the preferred provider organizations. Depending upon a patient's health needs and income levels, the PPO may ultimately be a better choice because it does provide access to a greater number of health providers and medical facilities. It is wise to ascertain the number of network physicians and facilities offered in PPO plans before deciding, as some HMO plans may be better deals when the HMO contracts with more providers than does a PPO.

The Health Board is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Tricia Christensen
By Tricia Christensen , Writer
With a Literature degree from Sonoma State University and years of experience as a The Health Board contributor, Tricia Christensen is based in Northern California and brings a wealth of knowledge and passion to her writing. Her wide-ranging interests include reading, writing, medicine, art, film, history, politics, ethics, and religion, all of which she incorporates into her informative articles. Tricia is currently working on her first novel.

Discussion Comments

By anon119484 — On Oct 18, 2010

What is the difference between the hmo and ppo if there is a hospital stay involved for surgery?

By anon110972 — On Sep 14, 2010

I have BCBS HMO, and had two unsuccessful orthopedic surgeries one on left shoulder in 09 and the other cervical disk replacement in 08. I want to choose my surgeon by switching to BCBS PPO. Does anyone know a better PPO company that won't give me problems for switching with a preexisting condition?

By anon71056 — On Mar 17, 2010

i have an HMO and PPO, presently i am looking for outsourcing providers. i have seen some good companies like VeeInsure and VeeTechnologies, are they OK for my purpose? thanks for help.

By anon59060 — On Jan 06, 2010

I work for a dental office. Having a PPO you have a lot more flexibility, you don't have to wait for referrals and you choose your doctor. To be honest, you also get better care with PPO.

With an HMO, doctors only get paid capitation fees which is like $5 per patient a month and some small fee for some major treatments, so that is $0 for a checkup and cleaning.

On the other hand, PPO pays between $120-$250 for a recall visit; so who do you think is going to get the best care and sooner appointments? A lot of good offices are now not accepting HMOs, too much paperwork and it's simply not worth it.

I used to work for an HMO office, and it's a headache. People think all the treatments are covered 100 percent, which is what the insurance companies make them believe, but that isn't the case.

It is convenient to have HMO if you know you need a lot of dental work since there is no maximum, but if you need more than 10 crowns, none of them will be covered because it's considered major reconstruction. Dental PPOs have a maximum benefit of between $1000-$3000, renewed yearly.

By anon50333 — On Oct 27, 2009

I live in any area that is dominated by HMOs. We have three HMOs based within a 30 mile radius so everywhere around here takes all three HMOs. My employer decided to change coverage and go with the PPO that is based in the main branch's location. There were no preferred doctors for a 100 mile radius around us. Moral of the story: a PPO doesn't always mean more flexibility. You have to look at the dominant coverage in your area.

By anon45304 — On Sep 15, 2009

I presently have a PPO plan with a company. My wife desperately needs an orthopedic surgery that they will not cover. Consequently, I am considering changing to a company but with a a PPO plan. The big difference is that this PPO plan is far more likely to cover the surgery. True, the PPOs are more restrictive in terms of the physicians in the plan. However, it seems that they provide more coverage.

By anon35600 — On Jul 06, 2009

I have an HMO that offers *one* pediatric occupational therapist for my children...*one*! The provider is a 30 minute drive each way, although its only 10 miles.

Do I have any recourse to have insurance pay for an out of network provider since they are not giving me a choice of providers? Are they allowed to dictate who I must see?

By karin9268 — On Feb 02, 2009

My husband and I find ourselves without medical insurance for the first time. We both had to change jobs due to the economy problems and our current employers do not offer medical benefits. Fortunately, I am healthy and usually only see a doctor for my yearly physical. My husband does have recurring medical problems and sees a doctor regularly and is on regular medication. We have always had HMO's in the past. Would a PPO or an HMO better fit our situation? Of course, money is tight now-a-days.

By anon14917 — On Jun 27, 2008

My son's teeth need braces. I know it is expensive to have one. I am now in the process of choosing what dental insurance shall i apply? which one would be better, Delta Dental PPo or DentalCare USA?

Please help me.

By anon13275 — On May 23, 2008

i have had an hmo for the past ten years and only now have i decided to switch to a ppo plan. i was referred to an eye specialist by my hmo but when my health provider decided to take him off the list of preferred doctors, i was forced to see a doctor who i was not happy with, now the old doctor i was seeing only takes ppo patients, and since he was such a good dr i will switch over to be able to see him.

By gr8ns3xy — On Mar 20, 2008

My question is: The healthy Individual PPO is offering to pay an all inclusive rate of $3200 for a normal delivery and $3600 if there are complications or C-Section. The Smiling Faces ppo is offering to pay 11% off usual and customary rates for normal delivery and will pay 8% discount in the case of complications or C-Section. The indemnity insurance company is willing to pay usual and customary rates without asking for any discount. The usual and customary rate in the community is $3650 for normal delivery and $4100 for C-Section or complications. The Healthy Individual ppo claims to have approximately 1200 members who live around the clinic while the Smiling Faces PPO has 500 patients who they also stay close to the clinic. The insurance company says they represent 200 patients using the clinic. Is the amount the payers want to pay sufficient and why or why not? Is the volume of patients is sufficient to warrant contracting with them?

By anon7439 — On Jan 26, 2008

I realize that health care in America isn't as inexpensive or accessible as we'd like, but if faced with the option between choosing an HMO and a PPO without one being cost prohibitive, I'd pay the extra money to get the PPO because that added flexibility, in my opinion, is definitely worth it.

Tricia Christensen

Tricia Christensen


With a Literature degree from Sonoma State University and years of experience as a The Health Board contributor, Tricia...
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