Understanding Medicare PPO Plans

Your Guide to Medicare PPO Plans

While the most common Medicare Advantage plans are offered by Health Maintenance Organizations (HMOs), the number of Preferred Provider Organization (PPO) plans are also steadily growing. 

Are PPO plans right for you? This guide takes a close-up look at Medicare PPOs, the benefits they offer, and how in-network and out-of-network care works in these plans. 

Understanding the Difference Between Original Medicare and Medicare PPOs

Original Medicare is a federal government program that provides health insurance to Americans over the age of 65. It consists of two parts:

• Hospital insurance, or Medicare Part A, for stays in a hospital, skilled nursing facility or hospice 
• Medical insurance, or Medicare Part B, for services provided by physicians and other health care providers 

Prescription drug coverage, or Medicare Part D, is offered by private insurers and can be added onto Original Medicare.

Medicare Advantage, or Medicare Part C, is offered by private insurance companies as an alternative to Original Medicare. These plans combine Medicare Parts A and B into a single plan with supplemental benefits that aren't available through Original Medicare, such as vision and dental. Most plans also include prescription drug coverage.

There are several types of Medicare Advantage health plans, including:

• Preferred Provider Organization (PPO) plans
• Health Maintenance Organization (HMO) plans
• Private Fee-for-Service (PFFS) plans
• Special Needs Plans (SNPs)

What Are Medicare PPO Plans?

Medicare PPO plans account for just over one-third of all Medicare Advantage plans, making them the second most common behind HMO plans. 

The federal government requires PPO plans to cover the same services as Original Medicare Parts A and B. Insurers can add an array of additional benefits, including:

• Vision
• Dental
• Hearing
• Fitness
• Wellness
• Prescription drugs

It's up to the insurance company to decide which benefits they provide, so be sure to compare policies if certain benefits are important to you. You should also keep in mind that once you're enrolled in a PPO plan, you're no longer in Original Medicare. Make sure your PPO plan includes prescription drug benefits if needed, as you can't purchase a separate Part D prescription drug plan if you don't have Original Medicare.

Do Medicare PPOs Use a Network of Providers?

Similar to an HMO plan, a PPO plan has a network of health care providers. You can see any Medicare-approved health care provider you wish, but it's cheaper for you to stay within the policy’s network and use a preferred doctor, hospital or medical facility. 

There are two types of PPO plans.

• A local PPO plan has a small network of providers serving one or more counties, or partial counties.
• A regional PPO serves an entire region and has a large network of providers in order to better meet the needs of beneficiaries in rural areas.

There are several differences between a Medicare PPO and HMO plan. With a PPO:

• You typically coordinate your own care
• You aren't required to have a primary care physician
• You can usually see a specialist without a referral
• You can use the services of an out-of-network provider, although it may cost you more

Choosing the Best Medicare PPO Plan

Everyone has different Medicare needs depending on their health, financial situation and where they live. As there's no single Medicare PPO plan that works for all, take the time to review your particular health care requirements before enrolling.

Here are some factors to consider when choosing a plan:

• Your personal health care needs in terms of treatments, medications and specialists
• How much you currently spend and anticipate spending on health care in the next year
• What the plan charges for premiums, deductibles and cost-sharing 
• Plan limits on out-of-pocket costs
• The supplemental benefits that are important to you, such as gym memberships or transportation to medical appointments

The specific PPO plans available to you depend on your service area. A good place to begin shopping for a Medicare PPO is with Medicare's online plan finder.