difference between hmo's and ppo's?

Answer 1

one simply f's you
the other lets you choose who f's you!

Answer 2

An HMO is a prepaid health insurance plan which includes an organized network of healthcare personnel and facilities which offer a wide range of services including preventative care to its members.

A PPO encompasses features of an HMO and private insurance. Plans are usually made up of a pre-selected group of physicians and hospitals that have contracted with insurance companies or employers to provide medical care at a discounted rate. Patients are encouraged to use "in network" providers or risk paying a greater percentage of the bills. Often, there is a "co-payment", or small fee required each time you visit your doctor. You may choose doctors and hospitals that are not in the PPO network for a slightly higher out-of-pocket fee.

Answer 3

HMO- health maintaince organizations are structured groups of health care providers who agree to a fee structure for providing health care. If you as a member go outside the group to a medical person their are strict penalties unless you have a referral.
PPO, Preferred Provider Programs are a list of health care professionals that you can choose from. This is a looser structure and allows you more choice and control. There are still penalties for going outside the network. Your copay is usually higher then an HMO

Answer 4

PREFERRED PROVIDER ORGANIZATION (PPO)
Under this system, doctors contract with an insurance company to accept specified reduced fees for their services; and the doctors also agree not to bill patients for the difference between their normal fees and what the insurance pays them. The insurance company then markets its group (or "panel") of doctors to major employers to provide medical services at some lower cost to the employer than traditional Indemnity Health Insurance.

Because doctors under this sort of program are paid a fee (albeit discounted) each and every time they see a patient, their natural inclination is to encourage patients to come to the office for evaluation if they call in with some sort of medical problem. In this way, PPO's are like Indemnity Insurance, because there is an incentive for doctors to actually see and examine their patients in person.

The "hook" concealed in this seemingly simple system is that once the majority of doctors in a community are signed up to provide their services at discounted fees to a number of insurance companies, the companies then get into bidding wars with each other as they compete for lucrative insurance contracts with large corporations. Of course, after underbidding the competition and getting the contract with a large employer (for example Dell Computer) for a year, the insurance company is certainly not going to reduce its own profit margin on the premiums; so the company simply turns to its panel of doctors and, without any negotiation, informs them that their reimbursements for their services have been reduced, say 10%, this year. Unfortunately, next year there will be another round of bidding between the insurance companies for Dell's next insurance contract; and the doctors end up having their reimbursement reduced yet again.

And so it goes while, at the same time, the doctors' overhead expenses (malpractice insurance, staff salaries, rent, supplies) continue to rise. Doctors are trained to fight disease, not how to play business hardball; and they're getting eaten alive to the point that many are beginning to wonder how they're going to cover their office overhead if current trends continue unabated for another year or two.


HEALTH MAINTENANCE ORGANIZATION (HMO)
This system completely eliminates traditional fee-for-service medicine in which doctors are paid for each patient visit. Instead, a doctor agrees to assume responsibility for a certain fixed number of a health plan's patients; and the physician is paid a flat fee every month for each of the patients on his list, whether the doctor actually sees the patient that month or not. This is called a "capitated plan", and a typical capitation amount might be $8 per patient per month. Thus if a doctor agrees to take on 500 of some plan's patients, he is paid a flat $4,000 every month even if he never lays eyes on one of those people all month. HMO's were originally conceived supposedly to give doctors an incentive to focus their energies on keeping patients well (as if they weren't already doing that); so that their patients would need expensive medical care less often.

Of course, just the reverse happened as patients began to clamor for more doctor visits and tests which they now regarded as their "right" because it was all "free".

The HMO concept totally ignores the fact that doctors come equipped with families to support and "human nature" just like everyone else. Place yourself in a doctor's position. You've got a big, expensive office operation with high rent, salaries to pay for 3-4 employees, malpractice insurance, etc. Assume your total practice overhead expense averages $17,000/mo. (see Overhead) That means that in our standard model (which assumes the insurance plan has eliminated all payments for lab work) you must contract with an insurance plan to take on 2,125 of their patients just to break even on your overhead.

However, once any Primary Care medical practice grows to even 1,500 active patients, the doctor has to keep moving pretty fast all day long just to stay up with his scheduled appointments (if he's doing a good job of doctoring). Unfortunately, with the HMO model we're discussing, you're now already up to 2,125 low-paying HMO patients; and you're just barely making enough money to cover your overhead. In this model, if you're going to have any personal income, you're going to have to contract for at least another 500 patients in order to have a $4,000/mo (pre-tax) personal income. Now you're really overloaded with 2,625 patients, most of them demanding care for minor problems because it's "free" and they're "entitled" to it, your appointment schedule is jam-packed for weeks in advance, your patients are frustrated and angry because they can't get in to see you when they really need you, you're evaluating and treating a lot of problems over the phone that you know you ought to be evaluating in person, and you're running top speed on a treadmill and can't slow down.