HMO VS PPO… THE FACTS
I have an exercise for you. Call a local dentist and try to make an appointment for a cleaning. Tell them you have dental HMO insurance. Observe how long before they can see you. Call back at a later time and do the same thing, this time tell them you have a dental PPO plan and see what happens. The results might surprise you.
If you are looking for dental coverage, either through your employer or on your own, you will frequently come across two terms: Dental HMO or Dental PPO.
Here is where the confusion begins and often where someone might as well flip a coin to determine which plan is best for their dental needs.
To be able to make the correct decision you should at least know the basic differences between the two plans. Be careful who you ask because you might get distorted information, you see the insurance company will give their version of what the coverage means, while the actual dentist who will be looking over your dental health has a totally different perspective of the same coverage.
To get a really good understanding, I will take a different approach; I will explain how the treating dentist looks at the coverage and what it means to your oral health and wallet. While both plans are viewed as a source of income by the dentist, and no matter what the insurance company claims the coverage should do, the dentist will treat you as he or she see fit.
So here’s how both plans pay the dentist:
The PPO Plan (Preferred Provider Organization) plan pays the dentist a contracted fee for the services they provide. The customer or patient receives a yearly allowance (usually between $1,000-$3,000). With this plan there are usually co-payments and sometimes a deductable the patient has to pay to the dentist. The plan has a three tier coverage: Preventive, Basic, and Major. The preventive services (exams, x-rays, regular cleanings, and other diagnostic procedures) are usually covered at 100% with no co-payments. Basic procedures (sealants, fillings, some extractions, deep cleanings, and other listed procedures) are usually covered at 80%. Major procedures (root canals, crowns, surgeries, extensive periodontal procedures, and other listed procedures) are usually covered at 50%. The exact percentage of coverage may vary from plan to plan. So what does this mean to the patient and to the dentist? For example, let’s take a filling that is covered at 80%, the insurance company will pay the dentist 80% of the agreed fee for the filling, let’s say of $200. Say that leaves the patient with a co-payment of 20% or $40. That would seem like a fair transaction to both the dentist and the patient.
The HMO Plan (Health Maintenance Organization) pays the dentist on a CAPITATION scale, meaning per head or in this case per person. Fees paid out to the dentist under this plan for services are usually free or very low. The only way the dentist can charge the patient more is if they perform procedures not covered under the plan. Instead, the insurance company pays the dentist a set amount for every person who signs up as a patient with the participating dentist (on average $2-$7 per person). The dentist gets paid every month for each person on their patient roster regardless if they go in for treatment or not. Now you might say $2-$7 dollars is not much, but if you consider that each dentist could easily reach 500 patients on their roster at $4 per person on the roster. Now let’s say the dentist signs up for 10 different plans, that’s 500 participants times 10 times $4 each month. You do the math! While the dentist agrees to such low fee, they make their money on volume.
What you should know, Summary for each plan:
PPO– Dentist are paid for the services they perform, the more services they perform, the more they are paid by both the insurance and the patient. Under this plan the patient is free to go to any dentist they want or switch dentist as they please. The patient receives a new allowance of benefits every year, allowing the dentist to prioritize treatment and allow the patient to maximize coverage benefits.
HMO– Dentist are paid a set fee for each person on their roster regardless if they are treated or not, in turn the dentist agrees to perform dentistry for free or at a very low cost. The less they see and work on the patient the better. The only time they are compensated outside of this agreed structure is if they perform services not covered under the agreement. In a way, the Insurance companies reward doctors for doing less. If the dentist performs covered services, they are losing money. Under this plan you are assigned to a dentist and it limits the choice of dentist you can go to.
The next time you are deciding on a new dental plan or dentist, find out how the dentist is reimbursed. What standard of care are you most comfortable with?