With the 2016 Obamacare plan year open enrollment about to begin on November 1st thru January 31st, one critical decision buyers must make is what kind of plan to choose. There are HMO, PPO, EPO, and POS plan among the most popular plans available. So just what do all these initials mean, and how does each of the plan types differ?
First an HMO, Health Maintenance Organization, is a term that has been around a long time. They gained popularity back when Hillary Clinton was just becoming a First Lady and had a plan for reforming healthcare. The HMOs were set up to capitate providers, or pay a set amount of money to them each month, to care for a group of members. Basically the insurer shared some risk with groups of providers. This still exists, but also many HMOs keep the risk at the insurance company and pay fee for service, a way of paying physicians when they get paid for each visit and procedure performed, to providers. Either way the providers and insurer work to coordinate the care of members and ultimately put an emphasis on preventive care over just rendering sick care.
HMOs chief characterization these days is a limited provider network and the need, in most cases, for a referral from a PCP (Primary Care Provider/Physician) for care from specialty providers/physicians. In some HMOs the networks surround a single primary hospital where one would receive inpatient and outpatient hospital care. In many cases the physician network is very small, and when tied to specific hospitals typically all physicians are at that hospital as well. These plans may be less expensive, but it’s it at a trade-off of provider choice. Out of network care is not covered and paid completely by the person seeking care.
A PPO is a Preferred Provider Organization. These plans have typically the largest networks of all health plans. Also, these plans allow out of network care to be covered, but with additional deductibles and higher co-insurance levels. One of the big considerations when using the out of network care is how much will really be covered, because the full charges are typically not allowed, only the limiting charge level as defined in the insurance contract. The member is left paying the amount above the limiting chares, so while out of network care is covered the amount actually covered may be far less than expected.
PPO plans also are more lax rules related to referrals. Typically they are only needed for hospital and other costly care such as high tech radiology and outpatient surgery. The requirement to get these authorizations typically fall on the provider, but can also fall on the member with economic penalties applied when the referrals or authorizations are not received for the care. The PPO plans tend to be the most expensive plan options available today.
EPO plans are Exclusive Provider Organization plans. These plans tend to have much larger networks than many HMO plans. Although they have larger provider networks, they tend to only offer coverage for in-network care. These plans tend to be more liberal in terms of requirements for referrals and authorizations for care. Thus, they are a lot like PPO plans without the out of network coverage component. These plans tend to be less expensive than PPO plans but more than either a HMO or POS plan.
POS plans are Point of Service plans which are a cross between an HMO and PPO plan. These plans tend to have HMO like networks and rules with coverage for out of network care when prior approval is provided by the plan. These plans tend to be more expensive than HMO plans but less expensive than PPO plans. Again like PPO plans out of network care can be expensive even though some of it may be paid by the insurer ultimately.
It’s important to understand the characteristics listed above are general rules. For competitive advantages in crowded markets some plans may vary from the standard characters in order to gain an upper hand selling their plans. In smaller markets networks may vary less between plan types than in larger metro areas where there are more providers. In some very large metro areas, sometimes there are variances of networks within the same plan type such as PPO or POS plans that utilize a single large provider network around one of the hospital systems for all in-network care. Also, there are some unique HMO plans with very large networks, but that chose to limit care paid to only that which is in-network.
Be sure you look at your chosen physician and hospital before you decide which plan is a best fit when signing up. Of course using a good licensed insurance agent is one of the best ways to get good guidance in choosing a plan. Focus more on meeting your care needs and physician network needs over just how much you will have to spend, because going cheap for the plan choice can really limit where you get care which can easily cost more money long term.
Ultimately one has to pick from the available plans where they live, so hopefully this information allows at least a glimpse into what make these plan types different. Happy pickling!
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