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What to Know About Medicare and HMO’s

Written by 
Molly Burford

Article at a glance

  • There are various Medicare Advantage plans to choose from, each one providing different levels of coverage. A Health Maintenance Organization (HMO) plan is a common type of Medicare Advantage plan.

  • Seeking services from an in-network provider is important for keeping healthcare costs low when someone has an HMO plan. 

  • Medicare beneficiaries with Medicare HMOs can still receive services outside of the plan’s network in certain situations. This is known as an HMO POS plan. This may mean higher out-of-pocket costs for services, however.

No matter what someone’s age, one of the most routine, and important, personal decisions they need to make involves choosing their health insurance each year. Understanding exactly what they need or want health care coverage for, such as routine dental care or prescription drugs, must all be taken into account when choosing the right, most cost-effective plan. 

When it comes to Medicare, there are many plans to decide between, from Original Medicare to various types of Medicare Advantage plans. This can make it difficult to understand Medicare coverage. Understandably, this level of choice can leave enrollees unsure of which one will best suit their needs, both when it comes to their health and their wallets. 

One option a Medicare enrollee may be interested in is a Health Maintenance Organization plan or HMO. An HMO plan is a type of Medicare Advantage plan. There are a number of ways enrollees can determine if this plan makes the most sense for them. 

What Is a Medicare Advantage Plan?

A Medicare Advantage (MA) plan, also known as Medicare Part C, is provided by private insurance companies that have been approved by the federal Medicare program. These are also types of Medicare supplement insurance plans.

What MA Plans Cover

Medicare Advantage plans to provide, at minimum, the same benefits and covered services as Original Medicare, including both Medicare Part A (hospital insurance) and Medicare Part B (medical insurance). Overall Medicare costs will vary based on the Medicare Advantage plan, however, including out-of-pocket costs.

In addition to the standard coverage, Medicare Advantage plans may also provide additional covered services, such as: 

  • Prescription Drugs (Medicare Part D) 

  • Vision Services

  • Hearing Care

  • Dental Care

Types of Medicare Advantage Plans

There are various Medicare Advantage plans for Medicare enrollees to choose from. The most common types are: 

  • HMO Plans

  • Preferred Provider Organization (PPO) Plans

  • Private Fee-for-Service (PFFS) Plans

  • Special Needs Plans (SNPs)

Note: To learn more about Medicare Advantage plans, including health maintenance organizations, visit this resource.

Health Maintenance Organization (HMO) Plans

Medicare Advantage HMO plans provide all the standard benefits of an Original Medicare plan, meaning coverage includes those associated with Medicare Part A and Medicare Part B. However, since it’s an MA plan, there are extra benefits and coverage.

While there are extra advantages, there are some important considerations Medicare beneficiaries should take into account before they enroll in a Medicare Advantage HMO plan to make sure it truly is what they need. 

Prescription Drug Coverage

In most cases, HMO plans cover prescription drugs. However, it is vital for enrollees to confirm that prescription drug coverage is included with the plan before they enroll. If a Medicare beneficiary enrolls in an HMO plan without Part D, they will be unable to join an additional Medicare drug plan.

Primary Care Doctors and Specialist Visits

HMO plans require an in-network primary care physician (PCP) selection. If the chosen primary care doctor or their health care team, decides to leave the plan’s network, HMO plans will inform the beneficiary, giving them the opportunity to find other health care providers within their HMO network.

In the case a Medicare HMO patient needs to see a specialist, they will require a referral to see one. However, some services, such as yearly screening mammograms, do not necessitate a referral. 

In-Network Providers

Medicare HMO plans usually call for its members to see health care providers within the plan network. In certain situations, however, out-of-network care is possible. These plans are referred to as HMO Point-of-Service (HMO POS plans). Additionally, certain out-of-network health care services are allowed, such as ones necessary in emergency situations.

It is important for Medicare patients to understand that prior authorization will be necessary for certain services. This is true particularly in the cases of out-of-network providers or specialist care. A Medicare beneficiary may be responsible for all costs associated if the doctor or specialist is not within the plan’s network. 

Health Maintenance Organizations (HMOs) vs. Other MA Plans

As aforementioned, Medicare Advantage HMO plans are just one option available through the MA listings. There are three other main types of MA plans to choose from, each one with its own drawbacks and perks. 

Note: Preview 2022 MA plans here.

Medicare PPO Plans

Just like Medicare HMO plans, a Medicare PPO plan will offer prescription drug coverage in most cases. However, just as with any other MA plan, Medicare enrollees should confirm whether they receive coverage for prescription drugs with the insurance company of their choosing prior to enrolling. 

How PPOs differ from HMO plans is within the flexibility allowed for out-of-network providers. While seeing an in-network doctor, or other in-network health care provider, costs less than seeing out-of-network options, patients are still able to see their chosen provider. As well, those who decide to go with PPO plans do not have to choose a primary care provider, nor do they have to secure referrals for specialist visits. 

It is important to take into account that a PPO plan is not the same as Original Medicare or Medicare Supplement (Medigap). While it usually offers additional benefits than Original Medicare, these extras may drive Medicare costs higher. 

Potential beneficiaries should always check with their insurance company before they enroll in any Medicare plan.

Note: Learn more about Medicare PPO plans at this resource.

Medicare Advantage Private-Fee-For-Service Plans

Private-Fee-For-Service plans, otherwise known as PFFS plans, are plans that allot a particular price for doctors and beneficiaries to pay when it comes to their care and appointments. 

To learn more about PFFS plans, visit this source.

Medicare Advantage Special Needs Plans

Special Needs Plans, otherwise known as SNPs, are plans tailored for specific beneficiaries that have special needs conditions and require targeted care plans.

To learn more about SNPs, visit this source.

Dual Eligibles & Medicare Advantage

Medicare beneficiaries enrolled in the Dual Eligibles Program to receive both Medicare and Medicaid services and coverage, are not eligible to enroll in MA plans. 


Is it better to have an HMO or a PPO plan?

Medicare Advantage plans are not one-size-fits-all. Each plan offers different logistics and amenities. For example, an HMO plan might be better for you if you’re looking for someone to help manage your care (PCP). Or, if you like more flexibility, a PPO plan could be a better fit. Be sure to weigh your options before deciding what’s best for you. For more information on the difference between HMO and PPO plans, visit this source.

What are the downsides of HMO plans?

HMO plans offer less flexibility than other MA plans which some subscribers find limiting. Most times, you have to select providers and healthcare practices that are in-network in order to receive coverage. To learn more about the advantages and disadvantages of various MA plans, visit this source.

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