Medicare Advantage PPO Plans: What You Should Know

What’s a PPO Plan?	Jump to
Pros of a PPO Plan	Jump to
Cons of a PPO Plan	Jump to
Other Types of Medicare Advantage Plans	Jump to

What’s a PPO Plan?

Preferred Provider Organization (PPO) Plans are a type of Medicare Advantage Plan sold by private insurance companies as an alternative to Original Medicare offered by the U.S. Government.

One of the essential differences between Medicare Advantage Plans and Original Medicare is that Medicare Advantage Plans have a network of preferred doctors that accept your health insurance plan. In contrast, Original Medicare allows you to go to any doctor or hospital accepting Medicare.

Medicare Advantage PPO Plans give you the flexibility to see both in-network and out-of-network health care providers. However, what you pay for health care services will vary significantly if the provider is in or out of your network.¹

Types of PPO Plans

There are two types of PPO Plans – Local PPOs and Regional PPOs – based on the size of their networks of health care providers.

• Local PPOs – A smaller service network area, such as a single county.
• Regional PPOs – A much larger service network that services an entire region or regions of the U.S.

Pros of a PPO Plan

Each Medicare Advantage Plan type has its pros and cons. Here are some qualities that make PPO Plans an attractive option.

Greater Flexibility

PPO Plans give enrollees greater flexibility on which doctors they can see. With Medicare Advantage HMO Plans, enrollees are required to use doctors and hospitals in-network or risk paying the full price for the service. With a PPO plan, you may be able to see an out-of-network doctor, but it will usually cost more than an in-network doctor.

No Primary Care Doctors or Referrals Required

PPO Plans do not require you to choose a primary health care provider, and this is another difference compared to HMO plans. This also means that you’re not required to get a referral to see a specialist. However, the cost of your covered health care services will usually be lower if you stay in your plan’s network.

Prescription Drug Coverage

In most cases, prescription drug coverage is included in PPO Plans. However, there are some PPO Plans that don’t have drug coverage. Remember, you can’t add a separate Medicare Prescription Drug Plan (Medicare Part D) to a PPO plan.²

Out-of-Pocket Costs

Medicare Advantage PPO Plans typically have out-of-pocket maximums, which put a cap on how much you must spend before the plan covers the rest of your health care costs for the rest of the year. Original Medicare doesn’t have an out-of-pocket maximum unless you have supplemental coverage like Medigap.

How a PPO Plan May Benefit You

Meet Hilde, a 65-year-old who splits time between Boston and Tampa, Fla., was recently diagnosed with two melanoma spots and is currently receiving treatment. Having a plan covering her specialists, limits out-of-pocket expenses and works in both states is essential. That’s why she chooses a Medicare Advantage Regional PPO Plan.

Hilde enjoys having the freedom to go to her specialists without needing a referral from a primary care doctor, especially when spending the winter months in Florida. Other benefits she enjoys about her plan include $0 copays for doctors’ visits, prescription drug coverage and transportation to her medical-related appointments with meal delivery. ^a

Cons of PPO Plans

Each health care plan is unique and may have less than attractive qualities than other Medicare Advantage Plan types. Some of these negatives may not be an issue, while others are worth considering. It’s all based on your situation.

Availability

Medicare PPOs are not as widely available to Medicare enrollees as HMO Plans. This meanmeans there are fewer plans to choose from overall. In 2022, 37% of all Medicare Advantage Plans available in the U.S. are Local PPO Plans (1,411 plans nationwide) and 0.01% are Regional PPOs. For comparison, there are 2,266 HMO Plans available nationwide (59% overall).³

Multiple Out-of-Pocket Maximums 

Most PPO plans have multiple out-of-pocket maximum amounts. You will have an in-network maximum and an out-of-network maximum for covered services. This means it may take longer to hit your total maximums – and have your plan pay 100 percent of all remaining covered services for the year – if you’re going in and out of network for services.

How a PPO Plan May Not Work for You

Meet Marc, a 70-year-old from Dallas, looking to simplify his health care experience. He retired at 63 due to a severe back injury and wants a health plan offering fewer out-of-pocket expenses.

There are a limited number of PPO Plans available in his area, and he doesn’t like the idea of keeping track of two separate out-of-pocket maximums. While some people may not like being required to see a primary care doctor before seeing a specialist, Marc doesn’t mind. Meeting his primary care doctor gives him time to understand his conditions better and receive recommendations on which specialists to see.
With limited plan options and more expense maximums to manage, Marc is considering another type of Medicare Advantage Plan, like a Health Maintenance Organization (HMO) Plan.^a

Other Types of Medicare Advantage Plans

Medicare Advantage comes in different plan types. There are five different Medicare Advantage Plan types available, including PPO plans. Those plans include:

• Health Maintenance Organization (HMO) Plans
• Private Fee-for-Service (PFFS) Plans `
• Special Needs Plans (SNPs)
• Medicare Medical Savings Account (MSA) Plans