HMO vs PPO: What’s the difference and which healthcare plan is right for you?

If you think choosing a healthcare plan is confusing and overwhelming, you’re not alone. How do you decide what’s best for you or your family? 

There are generally two types of health plans: HMOs and PPOs. What’s the difference? What if you already have a health condition?

To ease the stress of making the decision, our experts at UC Davis Health have come up with a simple guide to help explain the difference between an HMO and a PPO. 

What is an HMO?

HMO stands for Health Maintenance Organization. HMOs focus on lower costs made possible by using a specific network of doctors. If you have an HMO, a primary care doctor will partner with you on your general needs. If your condition requires a specialist, your primary care doctor will refer you to one.

Learn about the highly rated primary care doctors at UC Davis Health

What is a PPO?

PPO stands for Preferred Provider Organization. PPOs give you more options to choose your doctors and specialists. You don’t need a referral from a primary care doctor to see a specialist. You can choose specialists just like you choose your primary care provider.

Explore the healthcare plans accepted by UC Davis Health

What does “in-network” mean?

“In network” means that the hospital, doctor or specialist accepts your insurance plan for payment. It’s always a good idea to ask if a doctor is in your network. If you see a doctor who is out of your insurance company’s network, you may pay more, or even all, of the cost of treatment yourself.

If you have existing conditions, be sure to find out if your insurance company will pay for your specific medications and treatments. You should also ask for an estimate of how much it will cost you. 

See how telehealth visits can deliver urgent care quickly and easily

What are the key differences between HMOs and PPOs?

We’ve put together this chart to help you easily pick out the differences between HMO and PPO plans.

Are doctors in an HMO and PPO equally qualified?

Doctors in HMOs and PPOs complete the same medical school, residency and board certification requirements. Many doctors care for patients with either type of insurance.

Doctors at academic medical centers like UC Davis Health value research. That means our doctors may have early access to innovative clinical trials and new treatments that aren’t available from other health providers.

See how clinical trials at UC Davis Health improve the lives of patients everywhere

Find out how to participate in a clinical trial at UC Davis Health

Can I keep my current doctor if I switch to an HMO or PPO?

Yes, it is often possible to keep your current doctor if you switch to an HMO or PPO. Ask the person who handles “billing” for your doctor if they are an approved “in network” provider for the new plan. You can also call your insurance company.

Read why you should partner with a primary care provider for your health

What should you consider when choosing a health system?

There are several questions you can ask when looking at a health system, like UC Davis Health:

• Does the health system have a good reputation for routine and specialty care?
• Do they have convenient locations?
• Can I make telehealth (phone and video) appointments?
• Do they have the latest technology, equipment, research and clinical studies?
• Do they have pediatric services, including a children’s hospital?
• If you need a specialist, do they have many kinds of experts?
• If you have a family history of cancer, is there a cancer center in-network?

How do I see a specialist?

PPO patients simply make an appointment with a specialist. Primary care doctors may suggest specialists, but the choice is up to the PPO patient. HMO patients need written approval or a “referral” from their primary care doctor.

Learn more about UC Davis Health specialists and services

What is an insurance deductible?

A deductible is the amount you pay for healthcare services before your insurance starts helping with the cost. Most deductible amounts start over each year. Even after you pay enough to meet your deductible amount for the year, you will still likely be charged a copay for some services. A copay is usually a smaller fee you pay at the time of the appointment.

What is an insurance premium?

A “premium” is the amount of money you pay your health insurance company each month, or over another period, to keep your insurance coverage.

Do HMOs and PPOs offer different coverage for prescriptions?

Yes, there can be differences in what medications and treatments are covered by your insurance company and how much you pay for your medications. It’s helpful to ask for generic medications when possible and to research coupons for discounts at pharmacies.

So, what health plan is best for you?

The answer is that there is no one-size-fits-all solution. But here’s a quick recap:

• Choose an HMO if you want lower costs and one primary doctor who helps manage your care.
• Choose a PPO if you want to make decisions on your own, have more flexibility in choosing your doctors and direct access to specialists (without needing a referral from your primary care doctor).

Before enrolling: Compare doctors, access to specialty services, overall costs and prescription coverage.

Learn more about all the ways UC Davis Health has the services and specialties to partner with you

UC Davis Health is here to help you reach a decision that you feel confident is best for you and your family. Call 1-800-2-UCDAVIS to find a doctor to partner with you in your health care.

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This blog was reviewed by Liz Boileau, UC Davis Health Vice President, Chief Contracting Officer, Managed Care & Pharmacy Contracts