HMO Vs. PPO: A Simple Guide For Dentists

by Alex Musk

A new patient just called your office and asked if you accepted their HMO. Your staff doesn’t know the answer to the question. There are a lot of specific abbreviations and acronyms in dental insurance terminology. It’s common to get tripped up on it. Understanding these terms is important for anyone in the insurance or billing industry, or anyone that deals with insurance on a regular basis.  

We get it, this can feel like homework… You already went to dental school and worked hard, and learning dental insurance basics can feel monotonous.

In this article, we’re going to make it really simple for you to understand one of the most basic components of what dental insurance is: HMO versus PPO. While HMO is generically used, most dental plans are referred to as DHMO or DMO, with the D indicating it is a dental plan, not a medical plan. 

For the purposes of this article, we will use the acronym, HMO. The basics of an HMO plan design are the same, whether medical or dental.

At Dental ClaimSupport, our entire purpose is to make dentists’ lives simpler through taking care of their billing. That purpose extends to anyone interested in learning more about the world of billing and insurance, and we’re here to share the knowledge.

Perhaps you are trying to understand a patient’s insurance type. Perhaps you are trying to educate yourself on which type of insurance package you should purchase for your staff, trying to consider all things cost, out-of-network coverage and network size. Either way, once you finish reading this article, you will know what both HMO and PPO mean. You will understand the pros and cons of each insurance type.This knowledge will help you understand the patient’s insurance and how to not only help the patient understand but also be able to successfully file the claims.  

What is an HMO?

HMO stands for Health Maintenance Organization. HMOs are insurance plans where you can typically receive dental treatment for a set amount, using only your in-network benefits. You have a set copay amount that you always pay, and the HMO covers the remaining or a set portion of the cost for your procedure, similar to regular medical insurance. 

HMOs are based on a “closed panel” network. Closed panel means a plan that provides health benefits to covered persons primarily in the form of services through a panel of providers that have contracted with or are employed by the plan, and that excludes benefits for services provided by other providers, except in cases of emergency or referral by a panel member.

When we mentioned in-network above, we are referring to a closed panel network. Think of the network as a list of doctors that patients can go to that will accept a certain brand of insurance. For example, if your patient has Kaiser Permanente insurance, they are usually only able to go to other Kaiser facilities for insurance benefits that cover whatever procedure.

There are of course a few exceptions if a dental or medical office you are visiting is not part of your insurance network, such as emergencies while traveling. 

Pros of a HMO insurance plan

  1. Small, easier network to navigate. Because the network of HMO plans is narrower, it is usually a pretty clear choice who will and will not accept a patient’s insurance. This means they will know which facilities take their insurance with no prior research necessary, and there is likely less confusion when they come into your office because you already know they have to have one type of insurance. 
  2. Lower monthly premiums and deductibles. Typically with HMOs, because there is less flexibility on who and where you go for your healthcare, the overall costs for patients and those purchasing the HMO packages are lower.This is why we are seeing more DHMO plans either purchased by the patient or offered as an option by employers.

Cons of a HMO insurance plan 

  1. Less flexibility. Because HMOs have smaller networks, there are fewer choices of facilities, dentists and doctors for patients to choose from. This can be frustrating for someone who lives further away from their insurance provider’s specific network. This can also frustrate you as the dentist if someone comes in with some kind of emergency and is not in your network. 
  2. Must have a referral from PCP (Personal Care Provider). With this insurance type, you usually need a referral from a PCP to have any special treatment performed. This person is selected for patients when they first enroll into their HMO plan, and all treatment must be approved by this person. This can also be a drawback for dentists or doctors because it’s an extra point-of-contact you are having to clear procedures through. 

What is a PPO?

PPO stands for Preferred Provider Organization. For this type of insurance, patients typically have a choice of going to an office within your network or out of network. A PPO insurance may have a copay or an out of pocket percentage for the patient to pay, depending on which plan the employer provides or the patient has purchased. 

PPO insurance does not assign certain dental or medical offices to patients. PPO has in and out of network benefits. An example of a PPO insurance is Humana. If this is the patient’s insurance, the network is a list of offices around the patient’s area (and beyond) that not only accept Humana insurance, but others as well. 

Pros of a PPO insurance plan

  1. Large network with more options. PPO plans tend to have a broader network, which means if a patient carries this type of insurance, it is probably easier for them to find a healthcare provider. This gives them a lot more choices when it comes to choosing a dentist or doctor, and gives your practice more business because of accepting more insurances. 
  2. More coverage and flexibility. This means less comes out of the patient’s personal pocket when they visit a dentist or doctor, and like mentioned above, they have more healthcare providers to choose from. This can make for easier transactions between your front desk staff and patients. 

No need to select a Primary Care Physician. This means patients don’t need a referral for special treatments from one person in charge of any and all treatments you receive.

Cons of a PPO insurance plan

  • Higher monthly premiums. While less might be coming out of the patient’s pocket at the actual dental or medical visit, their monthly premium is usually higher with a PPO plan due to how much coverage and flexibility they have. This is why we see a greater number of PPO plans presented by our patients.  
  1. More research needed to find healthcare providers. Since patients have a vast amount of facilities, dentists and doctors to choose from, there is an element of research needed to find a healthcare provider and verifying that they accept your insurance. This means you as a dentist will have people calling your office pretty often asking if you accept their insurance. 

Which is better: HMO or PPO?

If you’re a frequent reader of Dental ClaimSupport’s blog, we’re sure you saw this answer coming: neither is better than the other! Really though, choosing HMO versus PPO as a patient, or as an insurance to accept at your dental practice, is highly dependent on your location and your budget.

If your budget is smaller when purchasing insurance or an insurance package for your company, HMO might be right for you. If you’re in a less urban or in a suburban area, PPO might be right for you, granting more flexibility and choices with a smaller pool of facilities to choose from because of the area you are in.

Both options have a network that will help patients get the medical or dental help they need at a fraction of the cost it would be without insurance, and both fit in with any smooth billing process that gets your practice paid. To keep learning about basic dental insurance terminology, check out our article covering all of those sneaky terms that are hard to keep up with.

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