How Medicare Advantage PPO Plans Work

December 10, 2019

Shopping for Medicare Advantage plans doesn’t have to be confusing. Most people choose between two main types of plans—HMOs (Health Maintenance Organizations) and PPOs (Preferred Provider Organizations). We’ll help clarify what a PPO plan is and help you determine whether it’s the right choice for you.

What is a PPO plan?

PPO stands for Preferred Provider Organization. Breaking down the phrase a bit can help us explain just how this type of plan works.

To start, a “provider” is any doctor or facility that provides you with medical care. When you have a PPO plan, you can choose to see any provider you like. PPO plans can be less restrictive than HMO plans, which have a set network of doctors and facilities you must use.

However, not all providers are created equal when you have a PPO plan. Some are “preferred” by the health insurer, meaning you’ll pay less for your care if you choose them. (This is similar to choosing an “in-network” provider in other types of plans.)

If you choose to receive care from a doctor or facility that is not inside the preferred network, you’ll pay more for your care. (This is similar to choosing an “out-of-network” provider in other plans, with the key difference being that a PPO plan will cover at least some of the cost.)

Essentially, PPO plans have a provider network (just as HMOs do), but you are not required to use it. However, if you do stay within the preferred provider network, you’ll save money.

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Is a Medicare Advantage PPO different from a regular PPO?

You may have heard the term PPO or used a PPO plan before you became eligible for Medicare. That’s because PPO plans aren’t limited to Medicare Advantage. PPOs (and HMOs, for that matter) are common types of health plans offered by private insurance companies such as United Healthcare and Aetna.

If you’re familiar with using a PPO plan outside of Medicare Advantage, you can rest easy. A Medicare Advantage PPO plan works much the same way. The only difference is that instead of your employer covering part of the insurance cost, the federal government does.

Some Medicare Advantage PPO plans even offer benefits that aren’t typically included in non-Medicare PPO plans, such as dental care, eyeglasses, and wellness programs.

How does a PPO plan compare to other Medicare Advantage options?

Weighing your options is easier when you can look at the plan types side by side. The chart below gives an overview of the two most common types of Medicare Advantage plans, PPOs and HMOs.

PPOs
HMOs
More flexibilityLess flexibility
Higher monthly premiumsLower monthly premiums
No need to choose a primary care physicianOne set primary care physician
Ability to see specialists without a referral from a primary care doctorReferral required to see a specialist
Ability to get care from any provider you like, but often for a higher costCoverage for in-network providers only
Prescription drugs covered in most plansPrescription drugs covered in most plans

There are other types of Medicare Advantage plans, but they are far less common. These options include Private Fee-For-Service (PFFS) plans, Medical Savings Account (MSA) plans, and Special Needs Plans (SNPs). For a full overview, see our Medicare Advantage Plans Guide.

Who is a PPO plan best for?

A Medicare Advantage PPO plan may work well if you . . .

  • Value freedom and flexibility. You don’t need to work through a primary care physician or request referrals before seeing a specialist.
  • Want access to more doctors and facilities. With a PPO, you can see any health care provider you would like, although you may pay more when you see providers that are not preferred by the plan.
  • Are fine with paying a little more in premiums for the flexibility a PPO offers.

You can change your plan

Don’t stress too much about finding the perfect PPO plan. Your decision doesn’t need to be forever. Each year, you’ll have the opportunity to choose a different plan that meets your needs—or keep the same plan if it’s still offered and working well. Our step-by-step guide to changing plans makes it easy.

You can also change plans when certain life events happen. Find out exactly when you can change your Medicare Advantage plan.

The bottom line

To select the right Medicare health plan for you, think about what you value most. If seeing any doctor you like and visiting specialists without a referral are your top priorities, a PPO plan may be the right choice.

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Kathryn Anne Stewart
Written by
Kathryn Anne Stewart
Kathryn Anne Stewart is a freelance writer who covers the intersection of health and money. She has written for Johns Hopkins Medicine, Weight Watchers, Newsmax Magazine, Franklin Prosperity Report, and the National Hemophilia Foundation, often crafting clear explanations of complex topics. When she's away from her desk, you can find her reading a library book, watching stand-up comedy, or cycling with her husband.
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