Ask the Medicare Specialist

QUESTION:

When it comes to Advantage Plans, which is better? An HMO or PPO?

ANSWER:

That’s a great question and can’t be answered without considering individual circumstances and plan design. Just like making a choice between an Advantage Plan or Supplement, there isn’t a one size fits all approach. HMO stands for Health Maintenance Organization. HMOs have their own network of doctors, hospitals, and other healthcare providers who have agreed to accept payment at a certain level for any services they provide. HMO’s offer more plans with lower premiums and generally provide overall better value. Co-pays for medical services are often lower across the board and The Maximum Out of Pocket (MOOP) is usually less. The majority of PPO’s have a MOOP of $6,700, the highest allowed. The negative of almost all HMOs is you can only choose to get care from in network providers. If you see a doctor or get a surgery out of network, the insurance company won’t pay a dime. You would be responsible for 100% of the cost. The only exception is in an emergency. From time to time you may see a news story about a health insurance company refusing to pay for services out of network for someone on an HMO, even in a situation where an out of state hospital may be the only one able to offer possible life-saving services or treatments. The good news is HMO’s are not like they were in the 90’s when you had to get a referral from your primary doctor to see a specialist. With all Western Pennsylvania Advantage Plan HMOs, a referral is not necessary to see a specialist as long as they’re in network. I’m a bit surprised how many people don’t realize this regarding HMO’s and have avoided them due to bad information. The bottom line is HMO’s work well for people who don’t travel for long periods of time. Most Advantage Plans provide in network access to every Western PA hospital and several Pittsburgh hospitals are consistently ranked high on the list of facilities providing the best care in the US. In addition, the Cleveland Clinic is in network with some regional Advantage Plan companies, which is a really big deal in my opinion. Even If you take a few vacations throughout the year, the only medical services you would likely receive or need would be in an emergency, which again, is covered the same as if you were in network at a local hospital. PPO stands for Preferred Provider Organization. Like HMO’s, there’s a network of doctors who have agreed to accept payment at set levels for services they provide. However, members can go out of network for care. But there’s a catch. Cost sharing is going to be higher for the member, possibly thousands more, when utilizing out of network providers. So, don’t be fooled if an agent or anyone else says in very simple terms that you can go to any doctor or hospital you want with a PPO. It isn’t true and very misleading. First of all, out of network doctors and hospitals don’t have to accept your PPO except in an emergency. The Mayo Clinic, one of the world’s best hospitals, does not take patients with out of state-based PPO’s. Most PPO’s don’t pay an out of network provider the same as those in-network. The majority of Western PA’s largest PPO providers only pay 55%-70% of what they normally do when an out of network provider is utilized. That means you would be on the hook for 30%-45% of the bill. In addition, The MOOP goes up to $10,000 for out of network services. At 30%-%45 of the cost, you would almost certainly have to pay that amount if you chose to have an inpatient procedure out of network. In addition, hospitals are usually going to want that money up front prior to providing services. This is one reason we sell very few PPO’s. What good does it do to have out of network access if you can’t afford it? There is a PPO available that has a large national network which may help eliminate the above situation. However, the premiums aren’t a whole lot less than what Supplements cost and can actually be quite a bit higher on their more expensive options. With Supplements, there is no in network or out of network. Any doctor or hospital who accepts Medicare Assignment will accept a Supplement, regardless of the company providing it. That out of network surgery that would cost $10,000 with a PPO, would be $0 for someone on a Supplement. But not everyone qualifies for a Supplement due to medical underwriting. So, if you travel for long periods of time to visit family or have a winter home down South or out West and can’t get a Supplement, an HMO really won’t work. The right PPO would likely be your best alternative. Annual Election Period is just three weeks away. Don’t assume anything regarding your current plan, especially if you haven’t had it reviewed in the last few years. We are now providing virtual appointments for those who don’t live within close proximately to one of our offices. If you have the internet, a computer, or iPad, you can interact with an agent and get the same thorough analysis of your plan as if you were sitting across the desk from us. Consultations are always free of charge. You can also listen to my most recent radio shows on demand at our website,