HMO vs PPO vs PFFS: What’s the Difference between these Medicare Advantage Plans?

Last Updated : 02/05/20196 min read

If you’re about to become eligible for Medicare or are currently enrolled in Original Medicare (Part A and Part B) , you may be interested in enrolling in a Medicare Advantage plan. Medicare Advantage, also known as Medicare Part C, is an alternative way to get your benefits under Original Medicare.

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By law, these plans must cover everything that Original Medicare covers (except for hospice care, which is covered under Part A), but because they are offered by private companies approved by Medicare, they can offer additional benefits and design their own cost-sharing structures.

Although there are several different types of Medicare Advantage plans allowed by law, three of the most common are the health maintenance organization, or HMO, the preferred provider organization, or PPO, and the private fee for service plan, or PFFS. If you’re not certain which plan type is right for you, or have questions about the difference between HMO and PPO plans, or how PFFS plans work, this article might give you the answers you need.

What is a Medicare Advantage HMO?

HMO plans use provider networks to help keep costs low for their members. What this typically means for you as a consumer is that you will need to:

  • Choose a primary care provider to act as a gatekeeper for all your health-care needs.
  • Get a referral when you need to see a specialist or other provider.
  • Get all your care (except emergency care, out of area urgent care, and out of area dialysis) from providers within the HMO plan’s network. If you go out of network, you risk paying out-of-pocket for your health care services.

On the plus side, most Medicare Advantage HMOs include Part D coverage for prescription drugs. Also, out-of-pocket costs such as copayments, deductibles, and coinsurance tend to be lower than for other types of Medicare Advantage plans as long as you follow the plan’s rules.

What is a Medicare Advantage PPO*?

One major difference between HMO and PPO plans is that you can typically get your care from any provider you choose with a PPO. Your out-of-pocket costs with a PPO plan will typically be lower if you use the PPO plan’s network of preferred providers. In addition, most PPO plans don’t require you to choose a primary care doctor or get a referral to see a specialist.

Like HMOs, most PPO plans also include Medicare Part D prescription drug coverage, although be sure to read your plan materials carefully to make sure.

HMO vs PPO: What is the difference?

If you are considering an HMO vs a PPO, these are the main differences to keep in mind:

  • Health coverage area: If you travel outside your HMO plan’s service area frequently, your health-care services (other than urgent or emergency care) may not be covered under your plan. PPO plans might cover you outside your area.
  • Provider network: If you don’t like the doctors and hospitals in your PPO plan’s preferred provider network, you do have the choice to go anywhere you want for your health care, as long as you don’t mind paying more out-of-pocket for it. Under an HMO plan, you typically do not have an option to use an out-of-network provider (except for urgent or emergency care) unless you are prepared to pay the full cost for your treatment.

What is a PFFS plan**?

Private fee-for-service (PFFS) plans work a bit differently than the other two types of Medicare Advantage plans. Under a PFFS plan, you can get your health care from any provider who will accept the terms of your plan. The PFFS plan establishes the amount it will pay for any particular type of service and the amount you must pay for that service. A provider can choose to accept or reject the payment amount of the PPFS plan.

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There is no mandate to choose a primary care doctor or get a referral for any specialist care, but it’s important to note that providers, even those who participate with Medicare, are not required to accept the terms of your PFFS plan. In fact, if you choose a PFFS plan, you should contact your provider every time before you get health care services to verify your plan will be accepted—even if you’ve used that provider in the past. There is no guarantee that the provider you choose will accept your plan terms.

Some, but not all, PFFS plans contract with a network of providers who will agree to accept your plan terms and see you any time you need care, even if you’ve never been a patient before.

Note, however, that if you need emergency care, you cannot be refused treatment even if the doctor or hospital would not otherwise accept your plan.

PFFS plans may or may not include Part D prescription drug coverage. If your plan does not, you can always enroll in a stand-alone Medicare Part D Prescription Drug Plan to complement your plan.

What are the main differences between PFFS vs PPO plans?

PPO and PFFS plans are actually quite different, with some of the key considerations being:

  • Provider network: A PFFS plan may or may not have a provider network that agrees to see you when you need medical care. A PPO plan, on the other hand, will generally have a network that you can use to save money out-of-pocket.
  • Prescription drugs coverage: Most PPO plans include Part D coverage for prescription drugs. This coverage may or may not be included in a PFFS plan.

Still have questions about HMO vs PPO or PFFS vs PPO?

I am happy to give you more information and answer your questions; you can schedule a phone call or request an email by clicking on the buttons below. You can also find out about plan options in your area by clicking the Compare Plans button. If you’d like to talk to someone today, give me or one of our licensed insurance agents a call at 1-844-847-2660 (TTY users can call 711) Monday through Friday, 8AM to 8PM ET.

*Out-of-network/non-contracted providers are under no obligation to treat Preferred Provider Organization (PPO) plan members, except in emergency situations. For a decision about whether we will cover an out-of-network service, we encourage you or your provider to ask us for a pre-service organization determination before you receive the service. Please call our customer service number or see your Evidence of Coverage for more information, including the cost-sharing that applies to out-of-network services.

A Private Fee-for-Service plan is not Medicare supplement insurance. Providers who do not contract with our plan are not required to see you except in an emergency.



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