What distinguishes a health maintenance organization (HMO) from a preferred provider organization (PPO)?

A health maintenance organization (HMO) is distinguished from a preferred provider organization (PPO) primarily by its requirement for members to obtain referrals from a primary care physician (PCP) in order to see specialists. This structure encourages coordinated care and typically results in lower costs for members, as HMOs often negotiate lower rates with providers.

Members of an HMO generally select a primary care physician who acts as a gatekeeper for referrals to other healthcare specialists. This means that if a member wants to see a specialist or access certain services, they must first visit their PCP, who will then determine if a referral is necessary based on the patient’s needs.

In contrast, PPOs allow members greater flexibility in choosing healthcare providers and do not require a PCP referral to see specialists. This arrangement often results in higher premiums compared to HMOs but offers broader access to a wider range of healthcare providers without the need for prior authorization.

The concept of requiring a primary care physician referral is a key feature of HMOs, setting them apart from the more flexible structure of PPOs, which typically foster more direct access to specialists and various services without such referrals.