Medicare is neither a PPO nor an HMO by default. Original Medicare, the program run directly by the federal government, is a fee-for-service plan that doesn’t use networks or require referrals at all. PPO and HMO are plan types you can choose if you switch from Original Medicare to Medicare Advantage, which is a separate way of receiving your Medicare benefits through a private insurance company.
This distinction matters because the rules around which doctors you can see, whether you need referrals, and how much you’ll pay out of pocket change dramatically depending on which path you’re on.
How Original Medicare Works
Original Medicare (Part A for hospital coverage, Part B for outpatient care) operates on a fee-for-service model. You visit any doctor or hospital that accepts Medicare, the provider bills Medicare directly, and you pay your share through deductibles and coinsurance. There are no networks, no primary care doctor requirements, and no referrals needed to see a specialist.
The provider pool is enormous. About 98% of non-pediatric physicians in the United States participate in Medicare. Only 1.2% have formally opted out, a share that has stayed roughly the same since 2013. In practical terms, you can walk into nearly any doctor’s office or hospital in the country and use Original Medicare.
The trade-off is that Original Medicare has no annual out-of-pocket maximum. Your costs can keep climbing if you need extensive care, which is why many people pair it with a Medigap supplemental policy to cover cost-sharing. Original Medicare also doesn’t include prescription drug coverage on its own, so you’d need a separate Part D plan for that.
Where HMOs and PPOs Come In
Medicare Advantage (Part C) is an alternative way to get your Part A and Part B benefits. Instead of the government paying your providers directly, a private insurer manages your coverage. These plans come in several types, and the two most common are HMOs and PPOs.
When you enroll in a Medicare Advantage plan, you’re still “on Medicare.” You keep your Medicare benefits. But the rules for how you access care shift to whatever structure the plan uses. Most Medicare Advantage plans also bundle prescription drug coverage, so you typically won’t need a separate Part D plan. In fact, if you enroll in an HMO or PPO through Medicare Advantage, you cannot sign up for standalone Part D coverage.
Medicare Advantage HMO Plans
An HMO, or Health Maintenance Organization, keeps costs lower by limiting your care to a specific network of doctors and hospitals. You generally must choose a primary care doctor, and you need a referral from that doctor before seeing a specialist. Certain preventive services like yearly mammogram screenings don’t require a referral, but most specialist visits do.
If you go outside the plan’s network, you typically pay the full cost yourself. There are three exceptions: emergency care, urgent care when you’re traveling outside the plan’s service area, and temporary dialysis when away from home. Beyond those situations, HMOs don’t cover out-of-network providers.
Some HMOs offer a Point-of-Service option that allows limited out-of-network care at a higher copayment or coinsurance. These are sometimes labeled HMO-POS plans, and they give slightly more flexibility than a standard HMO while still requiring referrals and a primary care doctor.
Medicare Advantage PPO Plans
A PPO, or Preferred Provider Organization, also has a network of doctors, hospitals, and specialists. The key difference is flexibility. You pay less when you use in-network providers, but you can go out of network for covered services and the plan will still pay a portion of the bill. The out-of-network provider does need to agree to treat you and can’t have opted out of Medicare entirely.
PPOs do not require you to choose a primary care doctor, and you don’t need a referral to see a specialist. You can book directly with a cardiologist, orthopedist, or any other specialist whenever you feel it’s necessary.
That added freedom comes with higher potential costs when you use out-of-network care. In 2025, Medicare Advantage plans can set their in-network out-of-pocket maximum up to $9,350, while the combined in-network and out-of-network limit can reach $14,000.
HMO vs. PPO: Key Differences at a Glance
- Network requirements: HMOs restrict you to in-network providers except for emergencies. PPOs let you see out-of-network providers at a higher cost.
- Referrals: HMOs require referrals for specialists. PPOs do not.
- Primary care doctor: Most HMOs require you to select one. PPOs generally do not.
- Premiums: Baseline costs like monthly premiums, deductibles, and copayments are similar between HMOs and PPOs, though actual prices vary by state and plan. Many Medicare Advantage plans charge $0 in monthly premiums beyond what you already pay for Part B.
- Out-of-pocket risk: PPO members who use out-of-network care frequently can face higher total costs because of the dual out-of-pocket limits.
Which Option Fits Your Situation
If you want maximum provider choice with no network restrictions and are willing to manage cost-sharing yourself (or buy a Medigap policy), Original Medicare’s fee-for-service structure gives you the widest access. It works well if you travel frequently, see providers in multiple states, or already have relationships with doctors you don’t want to lose.
If you prefer predictable costs and don’t mind staying within a local network, an HMO plan typically offers lower out-of-pocket spending and often includes drug coverage and extras like dental or vision. The trade-off is less flexibility and the referral requirement for specialists.
If you want a middle ground, a PPO gives you the safety net of in-network savings with the option to go outside the network when you need to. This is particularly useful if you split time between two areas or occasionally want to see a specialist who isn’t in your plan’s network. You’ll skip the referral step, but your costs will be higher than an HMO member’s when you stay in-network, and potentially much higher when you don’t.
Your choice also depends on what’s available where you live. Medicare Advantage plan options, networks, and pricing vary significantly by county. A PPO with a large network in one region might be far more restrictive in another.