HMO vs. PPO

What is an HMO Plan?

  • The Health Maintenance Organization (HMO) plan offers a broad spectrum of benefit coverage with a higher degree of managed care.
  • Under the HMO model, you and your enrolling family members will choose a Primary Care Physician (PCP) contracted with the HMO plan at the time of enrollment.
  • The PCP becomes the gatekeeper of your healthcare needs.
  • If you are in need of treatment from a Specialist or in need of an In-Patient or Out-Patient procedure, you must obtain a referral from the PCP prior to any type of consultation or treatment. If the referral is not obtained, no benefits will be paid.
  • There is no out-of-network benefit.
  • In the event of a life/limb-threatening emergency, you should dial 911 and all medical care will be covered. Once you condition is stabilized, the HMO will require that you be transferred to an In-Network facility.
  • HMO premiums as well as the out-of-pocket expenses (i.e. deductibles, co-payments, etc.) tend to be lower than their indemnity, POS or PPO counterpart due to the contractual element of capitation. Capitation means that the PCP is compensated by the HMO plan in the form of a monthly capitation fee for each member that signs up with him/her at the time of enrollment. The PCP has agreed to provide all primary care, as well as the cost for most labs and x-rays for that capitated fee. Additionally, in the event that the PCP provides a referral to a Specialist, the PCP will pay the Specialist from that same capitation. There are some hospital charges and lab/x-ray procedures that do fall outside of captitation.

What is a Point of Service Plan (POS)?

  • The Point of Service (POS) plan offers much more flexibility and choice than the HMO plan because there is an ‘In-Network’ and ‘Out-of-Network’ choice at the time you seek service from a provider.
  • The Aetna POS plan offers you the choice of choosing a Primary Care Physician if you so desire. You are not obligated to choose one.
  • The In-Network benefits (copays, coinsurance, etc.) will be greater than the Out-of-Network benefits. You will pay less when you seek your care In-Network. For example, many POS plans offer a copay of $10 for a physician office visit In-Network; that same office visit Out-of-Network can be as much as 50%.
  • At the time of service, the member has the ability to seek care from a Specialist, without having to obtain a referral from a Primary Care Physician.
  • The contractual agreement between the POS Plan and the Provider is on a “discounted fee for service” basis. This means that the provider who participates in the network has agreed to provide their service on an agreed upon discounted fee. The Provider who is not in the network will not agree to that discounted fee and will typically charge a “Reasonable and Customary” fee.
  • There is no capitation in a POS contract.
  • POS premiums tend to be higher than the HMO premiums due to the method of reimbursement and contractual agreements with the providers.