What’s the difference between HMO and PPO plans?

When you’re shopping for health insurance, you have a lot of options to choose from.  

Knowing the differences between plans can help you choose the one that’s right for your health care needs and budget.

As you look at plans, you may notice that some plans are HMOs and some are PPOs, but what does that mean?

  1. HMO stands for health maintenance organization. 
  2. PPO stands for preferred provider organization. 

All these plans use a network of physicians, hospitals and other health care professionals to give you the highest quality care. The difference between them is the way you interact with those networks. 

HMO plans


Welcome to Blue Care Network of Michigan. This video will help you understand our provider networks.

Jill: An HMO network is a group of specialists and primary care physicians that we contract with at Blue Care Network.

That also includes hospitals and other health care providers.

And, as a member of Blue Care Network, you have to select a primary care physician and stay within the network of providers that you’ve chosen.

Sara: The benefits to staying within your network is the cost savings and the coverage.

You always want to ensure that all your services that you’re having performed are in-network, that way you don’t get hit with any out-of-network bills.

Kirstie: Now, Blue Care Network has one of the largest network of doctors here in Michigan. So, when going on, it’s a very good chance that you’ll find your doctor.

Jill: Blue Care Network is organized into medical care groups. And in each medical care group, you have primary care physicians, specialists, hospitals and other health care providers.

And once you select your primary care physician, they typically refer to the specialists and the other health care providers in that medical care group.

Sara: So, the way it all works is you establish your primary care physician and then, whenever you need anything, you always go to them first. They coordinate your care. So, if you need a specialist or you need a procedure done, your primary care is your source for referrals and authorizations.

Stacy: When you’re choosing your primary care physician, it is the number one thing you need to know in joining a health maintenance organization or Blue Care Network.

Stephanie: The primary care physician piece the centralized physician that takes care of all of the members’ needs. All of the information from all other specialists flow into the primary care physician, so that he can make the best decisions in plan of care for the member.

Donovan: It’s very important to choose a primary care physician that you’re going to work well with and that’s going to work well with your specialist that you want to go see.

Sara: Well, whenever you’re choosing your primary care physician, there’s a couple things you want to keep in mind. You want to locate one that’s near you (near your home), you want to even do some word-of-mouth if your mom or dad or one of your friends or family, they’ve been to a certain doctor, you can always check and see if they’re in our network.

Or, here at customer service, we can even give you [an] opportunity to check online or a provider directory, so you have a list of all the different doctors available.

Kirstie: Now, if you don’t have internet access, turn that card over. On the back of your card, there’s a customer service number. You call that [and] any customer service rep will be able to assist you.

Sara: Prior to picking a physician, it’s always good to give the office a quick call and just kind of speak to them in regard to their specialist referrals. A lot of members want to make sure that their doctor can refer them to their specialists that they’ve become used to. So, always give them a call and just make sure that they can refer to your specialist.

Sylvia: Blue Care Network does not limit one physician per family. Your family can have individual physicians for each person in the family. That physician can be selected for your children that is different from yourself.

For the OBGYNs, all female members are able to select a OBGYN of their choice.

Narrator: If you have any additional questions regarding a plan, please feel free to look us up online at bcbsm.com. Or, call our customer service call center [and they’ll] be happy to assist you.

With an HMO plan, you pick one primary care physician. All your health care services go through that doctor. That means that you need a referral before you can see any other health care professional, except in an emergency. Visits to health care professionals outside of your network typically aren’t covered by your insurance.

For example, if you get a skin rash, you wouldn’t go straight to a dermatologist. You would first go to your primary care physician, who‘d examine you. If your primary care physician can’t help you, he or she will give you a referral to a trusted dermatologist in your network that will. 

One exception to this is that women don’t need a referral to see an obstetrician/gynecologist, or OB/GYN, in their network for routine services such as Pap tests, annual well-woman visits and obstetrical care.

Coordinating all your health care through your primary care physician means less paperwork and lower health care costs for everyone.

PPO plans

PPO plans give you flexibility. You don’t need a primary care physician. You can go to any health care professional you want without a referral—inside or outside of your network.  

Staying inside your network means smaller copays and full coverage. If you choose to go outside your network, you’ll have higher out-of-pocket costs, and not all services may be covered.

Which one is right for me?

If you prefer to have your care coordinated through a single doctor, an HMO plan might be right for you. And if you want greater flexibility or if you see a lot of specialists, a PPO plan might be what you’re looking for. 


MI Asian
Author: MI Asian