How Do Medicare HMO and Medicare PPO Differ?

If you decide to replace your Original Medicare with a Medicare Advantage (Medicare Part C) Plan, your two most common options are an HMO (Health Maintenance Organization) or a PPO (Preferred Provider Organization). Both use provider networks to help manage costs, but they balance price vs. flexibility differently.

Medicare PPO (Preferred Provider Organization)

A PPO lets you see in-network or out-of-network doctors and hospitals without referrals. You’ll generally pay less in network, but you can go out of network for a higher cost.

PPO:

  • Freedom to see a wider range of providers

  • Usually No referral requirements

  • Willingness to pay a bit more for flexibility

Medicare HMO (Health Maintenance Organization)

An HMO typically requires you to use in-network providers for most services (emergencies are an exception). You’ll usually choose a primary care physician (PCP) to coordinate your care and issue referrals to specialists.

HMO:

  • Varies from plan to plan but a referral from your PCP may be needed for some medical services

  • HMOs are a coordinated care approach through your PCP

  • You will have a defined network

Which Is “Better”?

It depends on your priorities:

  • Pick a PPO if flexibility and broad access matter most and you’re okay with higher potential costs.

  • Pick an HMO if lower costs are the priority and your preferred doctors participate in network.

How They Relate to Original Medicare

HMO and PPO structures are offered through Medicare Advantage (Part C) plans from private insurers. You first enroll in Original Medicare (Parts A & B), then select an HMO or PPO Medicare Advantage plan that fits your needs. A Medicare Advantage would replace your Original Medicare as your primary insurance.

Costs in Practice

  • HMO: Often lower premiums/copays in network; costs climb if you go out of network or skip required referrals.

  • PPO: Often higher premiums/copays, but you get larger networks and out-of-network coverage (usually at a higher rate).

Prescription Drug Coverage

Many HMO and PPO Medicare Advantage plans bundle medical + Part D drug coverage. If you take medications regularly, verify:

  • The plan includes Part D

  • Your prescriptions are on the plan’s formulary

  • Your preferred pharmacies are in network

Quick Decision Tips

  • Providers: Are your current doctors/hospitals in network?

  • Bottom line: Compare premium, copays, deductible, and out-of-pocket max.

  • Referrals: Comfortable needing referrals (HMO) or prefer none (PPO)?

  • Lifestyle: If you travel or live in multiple places, a PPO may be simpler.