What is an HMO v. PPO Health Insurer

In this video i'm showing you a way of visualizing the difference between hmos and ppos in health insurance now the actual terms stand for health maintenance organization and preferred provider organization but to be perfectly honest this name is really non-descriptive and.

Really doesn't say say very much about the structure this name is a little bit better but either way these have just become entrenched in the language of healthcare economics and healthcare policy and so we're just we're going over them so let's start with an hmo an hmo is.

Where the insurance company and the hospitals and the doctors are all under one organization they're all under one ceo and sometimes the doctors groups will sort of have their own semi-independent um organization that's that's linked heavily with the.

Hmo but generally it operates as one single big organization a ppo is a little bit different so let's visualize a ppo with a ppo the insurance company does not run the hospitals or does not work closely with a doctor's group.

That's almost part of the organization with a ppo basically the insurance companies negotiate with doctors and hospitals for in-network status so the insurer will sit down at a negotiation table with the doctors and come up with a price that obviously the doctors want a higher.

Price the insurance won a lower price but come up with a price and if the doctor is willing to work for that price the doctor will be listed as in network which is going to be cheaper for patients so patients are more likely to go to an in-network.

Doctor so it increases the demand that these doctors face for their services and if a doctor says no to that price that the insurer is is putting on the negotiation table and maybe holding to then the doctor has to be out of network in which case the people who are insured.

Under the ppo will have to will have to pay a higher price to out of poc out of the patient's pocket to go to that out of network doctor and that's basically the difference between an hmo and a ppo
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