Which of the following best describes the difference between an HMO and a PPO?

The distinction between an HMO (Health Maintenance Organization) and a PPO (Preferred Provider Organization) centers around their structural organization and how care is accessed. The statement that HMO requires a primary care physician (PCP) and referrals while PPO does not, and also covers out-of-network care, accurately captures the fundamental differences between these two types of health plans.

In an HMO, members are typically required to choose a primary care physician who acts as a gatekeeper to all other healthcare services. This means that if a member needs to see a specialist or access specific services, they must get a referral from their PCP first. This structure is designed to coordinate care and control costs; however, it limits flexibility in choosing providers outside the HMO network.

On the contrary, a PPO provides greater flexibility. Members do not need a referral to see a specialist and can seek care from any provider, including those outside of the network, although staying within the network generally results in lower out-of-pocket costs. This gives PPO members the autonomy to make their own healthcare decisions without the need for intermediary approvals from a PCP, which is a significant factor for many individuals when selecting a health plan.

This differentiation highlights how HMOs focus on managed care with structured pathways for