What is the difference between an HMO and a PPO?

The distinction between an HMO (Health Maintenance Organization) and a PPO (Preferred Provider Organization) is fundamental to understanding their structures and how they operate within the healthcare system. HMO plans typically require members to choose a primary care physician (PCP) and obtain referrals from that PCP to see specialists. This system is designed to streamline care and manage costs by coordinating treatment through the primary care provider.

In contrast, PPOs offer members greater flexibility in selecting healthcare providers. They do not mandate referrals for specialist visits, allowing members to see any provider they choose without needing a referral from a primary care physician. This flexibility often comes with a higher cost, as PPOs may have higher premiums and out-of-pocket expenses compared to HMOs.

Understanding this hallmark of referral requirements is key, as it influences the patient experience and the overall management of care in each type of plan. This is why the correct answer is that an HMO requires referrals while a PPO does not.