Insurance companies recruit providers in two ways
Insurers suggest that if a provider joins the network, they'll have an influx of patients who are encouraged by the insurer to use in-network providers. At the same time, the insurer requires that providers discount the amount of their bills submitted to the insurer for network members
HMO networks are typically smaller than PPO networks
Typically HMO networks require providers to give larger discounts on their billings than do PPO networks. Some providers are unwilling to give such high discounts, and hence avoid joining HMOs. PPO networks also require discounted billings by their providers, but almost always require lower discounts than HMOs. As a result, PPO networks commonly have more providers than HMOs. Still, some providers aren't interested in giving any discounts to the insurers and as a result don't join any networks. This is why some providers aren't on any networks, HMO or PPO.
Because HMO providers charge less, benefits are typically better
Since insurers pay less for services provided by HMO providers, they can afford to pay for somewhat better benefits for their members. In addition, by offerning stronger benefits, HMOs encourage prospective members to choose their plans over other options such as PPOs.
HMOs require that you utilize in-network providers
One important thing to remember is that with an HMO you must receive services from an HMO provider (except in case of a significant emergency). HMO members who don't remember this key point will find themselves being denied coverage from non-network providers.
PPOs allow a choice between in-network and non-network providers PPOs generally allow members to choose betwee network and non-network providers to receive services, though often services received from network providers are somewhat better in terms of out-of-pocket costs than from non-network providers. Still, being able to select either network or non-network each time you need medical attention is an attractive option for many. |
