Medicare Preferred Provider Organizations (PPOs) are one type of Medicare Advantage (Medicare Part C) plan. With PPOs, you are not limited to receiving services from in-network providers. However, you will pay more for out-of-network care.
When you enroll in a Medicare Advantage plan, you have various plan structures to choose from. Medicare Advantage PPO plans offer greater provider flexibility for beneficiaries.
With Medicare Advantage PPOs, you’ll receive coverage for any provider you’d like, but you’ll pay less if you use in-network providers and more if you use out-of-network providers.
You also don’t need to get referrals to schedule appointments with specialists.
In this article, we’ll explore Medicare Advantage PPOs, including what they cover, how they compare to HMOs, and the advantages and disadvantages of enrolling in a Medicare Advantage PPO plan.
Private insurance companies sell Medicare Advantage (Part C) plans. Medicare Advantage plans must provide coverage that is at least as comprehensive as Original Medicare (Part A and Part B).
Many Medicare Advantage plans also cover prescription drugs and other healthcare needs, such as dental and vision coverage.
When you enroll in Medicare Advantage, you typically choose a plan with one of the following structures:
- Preferred Provider Organization (PPO)
- Health Maintenance Organization (HMO)
- Private Fee-for-Service (PFFS) plan
- Medicare savings account (MSA)
- Special Needs Plan (SNP)
These plans differ in various ways, including their costs, provider access, and coverage rules. Anyone enrolled in Original Medicare can enroll in a Medicare Advantage PPO plan in their state. Some of these plans may have an additional charge.
How do Medicare Advantage PPOs work?
Medicare Advantage PPOs offer provider flexibility for people who want coverage for services from both in-network and out-of-network providers.
With a Medicare Advantage PPO, you can visit any provider. However, the amount that you pay differs based on whether that provider is in-network or out-of-network.
If you visit an in-network provider for your services, you will pay less than if you visit an out-of-network provider for those same services.
When you enroll in a Medicare Advantage PPO plan, you’ll be covered for:
- Medicare Part A: Part A coverage includes hospital services, limited skilled nursing facility care, limited home healthcare, and hospice care.
- Medicare Part B: Part B coverage includes medical insurance for the outpatient diagnosis, prevention, and treatment of health conditions.
- Prescription drug coverage: Prescription coverage is offered by most, though not all, Medicare Advantage PPO plans and by Medicare Part D.
- Other healthcare services: Some PPO plans include healthcare services like dental, vision, and hearing care.
- Additional health perks: Some PPO plans offer other benefits, such as fitness memberships and transportation to medical appointments.
Generally, Medicare Advantage PPO plans will be more costly the more you use out-of-network providers for your services. However, there are some baseline costs in almost all Medicare Advantage plans.
Premiums
When you enroll in a Medicare Advantage plan, you will be responsible for the Part B premium unless you have another type of insurance that covers it, such as certain Medigap plans.
Medicare Advantage PPO plans can charge monthly premiums, although some “free” plans don’t charge an additional premium.
Deductibles
Medicare Advantage PPO plans can charge a deductible amount for both the plan and the prescription drug portion of the plan. Sometimes, this amount is $0, but it depends entirely on the plan you choose.
Copayments and coinsurance
With a PPO plan, copayment amounts can differ depending on whether you visit a doctor or specialist who is in-network or out-of-network. Common copayment amounts range from $0 to $50 and up.
Medicare Part B charges a 20% coinsurance, which you will pay out of pocket after meeting your deductible. This amount can add up quickly with a Medicare Advantage PPO plan if you are using out-of-network providers.
Out-of-pocket maximum
All Medicare Advantage plans have an out-of-pocket maximum amount that you will pay before they cover 100% of your services. With a Medicare Advantage PPO plan, you will have both an in-network max and an out-of-network max.
Below is a comparison chart showing the costs of enrolling in a Medicare Advantage PPO plan in a major U.S. city.
| Atlanta, GA: HumanaChoice H5216-157 (PPO) | Denver, CO: Aetna Medicare Signature(PPO) | Detroit, MI: HAP Medicare Explore (PPO) | Hartford, CT: HealthSpring True Choice (PPO) | Kansas City, MO: AARP Medicare Advantage Essentials from UHC KC-4 (PPO) | Portland, OR: Regence MedAdvantage + Rx Primary (PPO) | |
|---|---|---|---|---|---|---|
| Monthly premium | $0 | $0 | $0 | $0 | $0 | $59 |
| Health deductible | $0 | $0 | $0 | $400 | $0 | $0 |
| Drug deductible | $0 | $615 | $200 | $250 | $600 | $550 |
| Out-of-pocket max | • $13,900 in & out-of-network • $8,900 in-network | • $10,000 in & out-of-network • $6,350 in-network | • $5,400 in & out-of-network • $5,400 in-network | • $11,000 in & out-of-network • $6,800 in-network | • $7,400 in & out-of-network • $4,900 in-network | • $10,100 in & out-of-network • $6,700 in-network |
| Primary copay | $0 | $0 | $0 | $0 | $0 | $0 |
| Specialist copay | $0 to $ 50 | $45 | $45 | $40 | $0 to $35 | $45 |
Before you enroll in a Medicare Advantage PPO plan, consider the following advantages and disadvantages and how they can affect your quality of care.
Benefits of Medicare Advantage PPOs
- PPO plans are a great choice for people who want to keep flexibility in the providers they visit, especially those who want to keep their current doctor.
- In addition, if you need services from a specialist, a referral is not required, and you can save money by using in-network specialists.
Drawbacks of Medicare Advantage PPOs
- Medicare Advantage PPOs aren’t as widely available as HMOs, which means fewer plan offerings for beneficiaries. Using out-of-network services often can cause healthcare costs to add up quickly.
- Most PPO plans also have multiple out-of-pocket maximum amounts. These additional fees can cause healthcare costs to add up quickly.
Research also suggests that PPO plans offer fewer new benefits over time than HMO plans.
How do Medicare Advantage PPOs compare to Original Medicare?
It’s important to consider all your healthcare needs when choosing between a Medicare Advantage plan or Original Medicare. When you compare the two plans, you’ll want to consider some of the differences below.
| Medicare Advantage PPOs | Original Medicare | |
|---|---|---|
| Part A | yes | yes |
| Part B | yes | yes |
| Part D (prescription drugs) | often included | add-on for additional cost |
| Medigap (supplemental) | not available | add-on for additional cost |
| Additional coverage | yes, varies by plan | no |
| Out-of-state care | yes | yes |
| Costs | Original Medicare costs + plan costs | included |
| Out-of-pocket max | yes | no |
After you’ve decided which type of Medicare plan best suits your needs, you can compare plan costs and find a plan that will save you the most money.
Medicare Advantage PPOs allow beneficiaries to seek services from out-of-network providers, while HMO plans do not.
When you visit out-of-network providers with a PPO plan, you are covered but pay more for services. When you use out-of-network providers with an HMO plan, you are generally not covered and will pay the full cost for those services out of pocket.
You can continue to visit your doctor with your PPO plan, as Medicare Advantage PPOs don’t require that you choose a specific primary care provider (PCP). However, if your doctor is out-of-network, you will pay more for their services.
Unlike Medicare HMOs, Medicare Advantage PPOs don’t require a referral for specialist visits. If you seek services from a specialist in your plan’s network, you will save more money than if you visit a specialist out of the network.
While they may have a higher premium, Medicare Advantage PPO plans allow enrollees to visit out-of-network providers. PPO plans offer cost savings when using in-network providers, but these costs can add up when visiting out-of-network providers.
PPO plans do not require participants to see a PCP for a referral to a specialist, which can benefit those who value flexibility.
Comparing multiple plan offerings in your area can help you choose the best Medicare Advantage PPO plan for your needs.