Medicare Advantage plans usually offer an HMO or PPO network. Insurance companies utilize cost-saving features such as a network of providers and PCP referrals to stretch the purchasing power of each dollar.
How Medicare Advantage HMO Plans Work
An HMO uses a Health Maintenance Organization. With an HMO, the insured person must select a primary care doctor. The primary care doctor (PCP) will issue a referral when the patient needs to be seen outside their office.
The insurance plan doesn’t cover services outside the network or services provided without a referral except for some preventive services, mammograms, and services related to emergency care.
HMO plans tend to offer some of the lowest premiums but are often disregarded due to the restrictions. These types of plans may include a lower cost, restrictions, or follow different rules.
Medicare Advantage HMO plans must provide at least the same compensation package as Original Medicare. All Advantage plans must offer the same rights, benefits, and protections as Original Medicare.
Advantage plans can be competitive by offering ancillary benefits such as vision, hearing, and dental services.
Who is eligible for Medicare Advantage HMOs?
If you live in the service area, have Medicare parts A and B, you can enroll in a Medicare Advantage plan. With the exception of persons with End-Stage Renal Disease.
Medicare beneficiaries are eligible to enroll in a Medicare Advantage HMO during the following periods:
- Initial Enrollment Period – begins three months before turning age 65, the birth month, and concludes at the end of 3 months after turning 65.
- Annual Enrollment Period – every year from October 15th through December 7th.
- Special Enrollment Period – a special enrollment period may exist in some instances.
What is the difference between an HMO and a PPO?
An HMO utilizes the PCP as the gatekeeper and requires any services outside an emergency must first be addressed with the PCP.
The primary doctor will determine if they can treat the patient. If a specialty provider or care outside of the scope of the PCP is necessary, the PCP will issue a referral to the patient.
Services received without a referral may not be covered under an HMO plan unless the care was due to a medical emergency.
A PPO (Preferred Provider Organization) utilizes a network of providers and pays a higher benefit when the network providers are used. Referrals are not required, and Medicare Advantage PPO plans tend to cost more than Medicare Advantage HMO plans because they pay a percentage of the benefit even out of network.
Are Medicare Advantage HMOs Different than Original Medicare?
A Medicare Advantage HMO is a different option from Original Medicare.
Original Medicare can be used at any doctor or hospital that accepts Medicare. After your deductible, Original Medicare pays at 80% coinsurance for Part B services, leaving the Medicare beneficiary with an out-of-pocket responsibility of 20%.
With a Medicare Advantage HMO plan, most services have only a small co-pay or coinsurance assigned to the beneficiary.
Keeping your PCP involved in all aspects of patient care is the HMO way of maintaining healthy members.
Utilizing wellness checkups and PCP visits to address concerns before they become costly is one way HMOs stay ahead and minimize expenses.
Primary care doctors encourage their patients to keep yearly visits to review pre-existing conditions and discuss new concerns.
What are the Drawbacks of an HMO?
The most significant drawbacks of a Medicare Advantage HMO plan are the referral requirement and network of providers.
If your doctor leaves the network, you’ll need to select a new doctor. If the practice leaves the network, you’ll need to choose a new practice. HMO plans only provide coverage for in-network doctors.
Referrals are the other deterrent for HMO plans. Beneficiaries are encouraged to discuss health concerns with their primary doctor.
Open communication with the doctor should help patients get referrals to specialists in a timely manner.
If you keep your PCP in the loop and address concerns before they become issues, obtaining referrals for additional treatment isn’t going to hold up care.
HMO Common Characteristics
- Low monthly premiums – HMO plans have little to no monthly premium.
- In-network benefits – HMO plans don’t pay benefits outside the network except in an emergency.
- No health questions – No health questions are asked when enrolling in a Medicare HMO plan.
- Referral required – from the PCP, except in an emergency.
- Part D drug coverage – usually included in Medicare HMO plans.
- Copays and coinsurance – usually, insured persons pay a small copay for covered services in place of the 20% typically assigned by Original Medicare.
- Annual plan changes – Plan changes can be made by the insurance company every year.