Which of the following statements best describes the difference between a health maintenance organization (HMO) and a preferred provider organization (PPO)?

Question

a.
An HMO is paid a monthly premium for ongoing services while a PPO collects no money until after services are rendered.
b.
An HMO allows the insured individual to choose from a list of providers while a PPO assigns the insured individual the provider nearest his or her residence.
c.
An HMO requires the insured individual to go to a provider within their organization while a PPO allows the insured individual the option to receive care from a non-preferred provider at a higher cost.
d.
An HMO is usually paid for by the insured individual’s employer while a PPO usually requires the insured individual to pay a co-pay or deductible for services.

Answer 1

The statement that best describes the difference between a health maintenance organization (HMO) and a preferred provider organization (PPO) is:

c. An HMO requires the insured individual to go to a provider within their organization while a PPO allows the insured individual the option to receive care from a non-preferred provider at a higher cost.

This statement accurately captures the fundamental operational difference between the two types of health insurance plans, where HMOs typically have strict networks of providers while PPOs offer more flexibility in choosing providers, albeit at a higher cost for out-of-network services.