Compariason of Hmo's and Ppo's

Topics: Preferred provider organization, Health insurance, Managed care Pages: 4 (1230 words) Published: September 16, 2012
Comparison of HMO’s and PPO’s

May 9, 2011

Dr. Rhonda Hatfield

MHA 628

Health care cost has risen dramatically in the last decade. Health care plans have been forced to look at the quality of health care given by the providers so they can implement certain strategies to help reduce heath care costs. Managed Care describes a group of strategies that is looking to reducing the costs of health care for health insurance companies. (Kongstvedt 2007)

Through the use of managed care, HMOs and PPOs are able to reduce the costs of hospitals and physicians. Managed care is a set of incentives and disincentives for physicians to limit what the HMOs and PPOs consider unnecessary tests and procedures. Managed care generally requires the consent of a primary-care physician before a patient can see a specialist.

There are two basic types of managed care plans, HMO or health maintenance organizations and PPO’s or preferred provider organizations. Both help plans contain costs by contracting with health providers for reduced rates on the services for its members. PPO’s often will cover the costs of care when the provider is out of their network, usually at a reduced rate. The important difference is that HMO’s will not cover out of network providers and PPO’s will. (

Both plans (HMO’s and PPO’s) control health care costs by use of a primary care provider which is a PCP. Plan members must select a primary care practitioner which could be a physician, physician assistant or a nurse practitioner. The primary care is responsible for coordinating health delivery for plan members. Receiving care by a specialist physician will require a referral from the primary care provider (PCP.) This cost containment strategy is intended to avoid service being duplicated by the PCP and the specialist. (

The similarities of both the HMO’s and PPO plans...
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