Question: I’d like some more clarification on the difference between a Medicare Advantage Plan HMO and a Medicare Advantage Plan PPO. I’m still deciding between your recommendation of going with a Medicare Supplement Plan, but want to compare it with alternative Medicare Advantage Plans that includes drug coverage. I’d like to know what key points to focus on when doing comparisons, so I can make the best decision if I go with this “bundled” coverage route you referred to on your website on the Medicare Roadmap. I live in Sacramento County and will be turning 65 in November of 2022. Can you please use examples available in my Zip Code 95864? Thank you John!

Answer: Great Question. Let’s start by looking at what Medicare Advantage Plans (MAPD) are available to you in Zip Code 95864. I ran a search and found that Sacramento County offers 25 Medicare Advantage Plans in Sacramento County in 2022.  Of those 25 Medicare Advantage Plans, there are 22 HMO plans and 3 PPO plans. With this said, I’d like to also share with you how other counties in close proximity differ for those in Sacramento County. This is will help you grasp the concept that each county will have a different amount of MAPD plans available (HMO/PPO). 

Note: you may be marketed Medicare Advantage Plans that are not available in your ZIP Code. Often times insurance companies send out information via television, mailers, and internet adds that don’t necessarily correspond with all the counties in the marketing region. Just remember this when searching. As always

Sacramento County: 25 (22 HMO/3 PPO)

Yolo County: 19 (16 HMO/3 PPO)

El Dorado County: 7 (5 HMO/2 PPO)

Sutter County: 2 (0 HMO/2 PPO)

Placer County: 18 (15 HMO/3 PPO)

As you can see, the number of plans vary widely from county to county in the Sacramento Valley. This same concept will be similar to each and every region of California, but for this particular question, I’ll focus on Sacramento County’s plans and apply key points to focus on for all Medicare Advantage Plans in California. 

HMO (Health Maintenance Organization) – in network and out of network providers. This style of plan is made up of Medicare providers that agree to the terms of the plan and offer their services accordingly. In this Medicare insurance plan model, you will have access to ONLY in network providers, except in emergency situations. You’ll likely need to select a primary care provider at the time of enrollment (always check availability before selecting). This primary care physician will most often direct you to specialists through referrals. 

PPO (Preferred Provider Organization) – In network and out of network providers. This style of plan is made up of Medicare providers that accept the terms of the plan, however, there are providers that take the plan in-network as well as providers that accept the plan, but are considered out of the network. In this plan style, you’ll have the choice of using in-network providers and/or out of network providers. You will likely have a primary care physician setup on the plan, but may have more control to see physicians out of network without a referral, if you choose to do so. 

Key points to focus on when reviewing potential Medicare Advantage Plans:

– If you choose an HMO plan, you’ll need to find out which medical groups are in-network with the plan. In Sacramento County you may have plans that work specifically with Sutter Medical Group, Dignity, UCD, Kaiser, etc. Some plans may be coordinated with only one group in-network while others may provide access to multiple medical groups. Also, just because the Medicare Advantage Plan is coordinated with “your preferred medical group” doesn’t mean that your current physicians in that particular medical group accept the Medicare Advantage HMO plan. It is important to search each doctor individually to see if he/she accepts the plan. you’ll likely find a portion of your physicians in the plan. If this isn’t going to work for you, you may want to look into PPO plans as an alternative to the HMO plan.

– If you choose a PPO plan, the same process should be followed for checking your plan as I stated above. Even though the PPO plan allows you to have access to “out-of-network” physicians, I highly recommend to use the plan with the intent of finding doctors/providers that are in-network. This is because the cost to see out-of-network physicians is typically much more expensive. If you choose to go the PPO MAPD route for your coverage, I recommend that you focus on using it like an HMO for a majority of your needs, and use the out-of-network access in special circumstances when needed. These PPO Medicare Advantage Plans do not function like the PPO plans you are accustomed to using prior to turning 65 on Medicare. The “access” to physicians out-of-network is possible, but the cost to use these providers costs so much more 

– If you want the most access to Medicare physicians (from multiple medical groups) and you do not want to deal with in-network and out-of-network issues, consider choosing to keep your Original Medicare and add a Medicare Supplement Plan. This will alleviate all these issues. The cost upfront per month may be more expensive (i.e. Plan G with any company $100-$130 at 65), but you’ll also have much more predictable out of pocket expenses if/when you use the plan. You may always leave the Medicare Supplement plan down the road if you choose to do so, however, you’re not always going to be able to move from a Medicare Advantage Plan to a Medicare Supplement Plan (unless you’re approved after going through medical underwriting- health questions). 

This is often the most overlooked detail for all Medicare beneficiaries turning 65. Most often, this is something that is not disclosed to clients when an agent or broker is pushing Medicare Advantage Plans to their client. Reason? The Medicare Advantage commissions pay agents much more than Medicare Supplement Plans! I have clients in all styles of plans, however, I believe you deserve transparent advice and only then can you make the most appropriate choice for your coverage based upon what you can afford for your Medicare insurance plan coverage. My job is to provide you accurate and objective information so you can make a decision with all the facts!

– Both HMO and PPO Medicare Advantage Plans will include a Medicare Prescription Drug plan (also called Part D). This Rx plan will be “bundled” with each plan and is not interchangeable. This makes the process easy for some, however, it can cause some issues if the particular Medicare Advantage plan you’re considering doesn’t cover your medications well. You will then be back to the drawing board looking at plans that cover your medications well and can work for your group of physicians you want to see. 

To avoid this issue, consider enrolling in a Medicare Supplement Plan and adding a stand-alone Medicare Prescription Drug plan. These plans are customizable to the separate Medicare Supplement Plan. For example, a client in 2022 would have the opportunity to select one of the 25 Part D plans in CA and add it to any Medicare Supplement Plan of their choice. These plans never “bundle” together. Therefore, you’ll always be able to keep the Medicare Supplement coverage you prefer and choose the most appropriate Medicare Prescription Drug Plan ( Part D) each year for your drug coverage. This will allow you to make changes to your drug coverage each year without affecting your access to doctors/providers. 

Last key point. Review the copayments, co-insurance, and most importantly the OOP Max (out-of-pocket max) for each Medicare Advantage Plan if you’re still considering this route for your Medicare health coverage. You’ll likely see lower out of pocket max for HMO plans. Thus, you have less control of your plan with in-network providers only, but you’ll have potentially less out of pocket costs as compared to a PPO plan. As for the PPO plans, there will be two OOP Max figures to look at. Typically the in-network OOP Max will be higher than HMO plans and the OOP Max for out-of-network in the PPO will be even higher (in most cases). 

For example, the OOP Max on an HMO plans in Sacramento County ranges from $3,400-$7,550. As for OOP Max on Sacramento County PPO plans in-network, they range from $4,200-$11,300. This is the figure that dictates the most you would pay for medical services in that calendar year. This OOP Max figure does not count for prescription costs on the Part d bundled portion on the plan. There is a different structure for the Part D plans. 

If you have more questions, or would like assistance comparing Medicare Advantage Plans, Medicare Supplement Plans, and Medicare Part D Plans, please contact my office or request help via MedicareSupplementMentor.com’s request help button. We will reach out to you and provide you with transparent Medicare advice. 

John