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HMO vs PPO: what is the difference?
An HMO usually covers care only from its own network, except emergencies, and often needs a referral to see a specialist. A PPO costs less in network but also covers out-of-network providers for an additional cost, without a referral.
Facts only, from 4 cited sources, checked October 23, 2026. This page does not recommend either option.
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HMO vs PPO side by side
| Health maintenance organization | Preferred provider organization | Source | |
|---|---|---|---|
| Network rule | Usually limits coverage to doctors who work for or contract with the HMO | Contracts with providers to form a network; you pay less in it | HealthCare.gov: Health insurance plan and network types |
| Out-of-network care | Generally not covered except in an emergency | Covered for an additional cost | HealthCare.gov: Health insurance plan and network types |
| Referral to a specialist | Many HMOs require one from your primary care doctor | Not needed to use out-of-network providers | HealthCare.gov glossary: Referral |
| Service area | May require you to live or work in it | No such requirement in the HealthCare.gov definition | HealthCare.gov glossary: HMO |
| Balance billing | Network providers may not balance bill for covered services | Out-of-network providers may bill the difference above the allowed amount | HealthCare.gov glossary: Balance billing |
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Questions
What is the difference between HMO and PPO?
An HMO usually covers care only from its own network, except emergencies, and often needs a referral to see a specialist. A PPO costs less in network but also covers out-of-network providers for an additional cost, without a referral.
Is an HMO or a PPO cheaper?
It depends on the plan. HealthCare.gov describes both as costing less when you use network providers; a PPO also pays something toward out-of-network care, at a higher cost to you. Compare the plans' premiums, deductibles, and out-of-pocket maximums.
Do Medicare Advantage plans come as HMOs and PPOs?
Yes. HealthCare.gov lists HMOs and PPOs among Medicare Advantage plan types, along with Private Fee-for-Service plans, Special Needs Plans, and Medical Savings Account plans.