PPO policies offer a wider choice of health care providers compared to HMO plans, but out-of-pocket expenses are higher under PPO plans.
According to a September 2010 U.S. Census Bureau report, 63.9 percent of Americans had private health insurance coverage in 2009. Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs) are two types of private health insurance plans, each with their strengths and weaknesses.
Pros of HMOs
According to the American Heart Association (AHA), HMOs usually offer the broadest range of services for the lowest out-of-pocket cost. Also, according to a Consumer Reports National Research Center survey of over 37,000 people, HMO members were more satisfied with their providers' customer support and reimbursement policies than were PPO members.
Cons of HMOs
HMO plans are more restrictive than PPO plans in that members must choose from a limited pool of health care providers, according to the AHA. Also, in order to see a specialist under an HMO plan, patients must first get a referral from their primary care physician.
Pros of PPOs
PPO plans are less restrictive than HMOs with regard to choice of health care provider, and PPO members are not typically required to obtain a referral from their family doctor in order to see a specialist, according to the AHA. Also, unlike HMO plans, which normally only reimburse for medical services rendered by providers belonging to the HMO network, PPO plans reimburse for some health services procured from out-of-network providers, albeit for a higher cost to the patient than is paid for in-network services.
Cons of PPOs
According to , PPO members not only pay more for their health care; they also experience greater difficulty receiving reimbursements owed to them. Among seriously ill individuals surveyed by Consumer Reports, 32 percent of PPO members reported having billing hassles compared to only 13 percent of HMO members.
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