Resource Group

Let Resource Group guide you through the maze of HMOs, PPOs and WHO KNOWS of today's confusing health care industry.

Healthcare delivery systems have evolved from the old indemnification format to today's managed healthcare industry we have come to know as HMOs, PPOs and POS Plans. Further, tax favored delivery systems, such as HRAs, HSAs, and FSAs, have been thrown into the mix to provide tax benefits and ultimately make health care costs more affordable. Below we will examine the basics of the managed care system from least expensive to most desirable healthcare delivery platform.

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HMO Plans

A Health Maintenance Organization is a type of managed healthcare system. It is a group of healthcare providers (e.g. doctors and hospitals) who participate in the organization. In an HMO, you will choose a primary care physician (PCP), who must be a member of the HMO, and will provide most medical care for you. In an HMO it will also be necessary to obtain a referral from your PCP in order to see a specialist. EPOs (Exclusive Provider Organization) are somewhat similar to the HMO with the major exception that a referral is not required when seeking the services of an in-network specialist. Payment for services within the HMO system has typically been office visit co-pays, $10, $20 or $30. To help lower the cost of providing this coverage some HMOs are beginning to include deductibles and co-insurance provisions for services other than routine office visits.

POS Plans

A Point of Service plan is essentially an HMO that also provides access to healthcare from non-network providers. The non-network access is typically subject to deductibles and co-insurance provisions that result in significantly higher out of pocket expense than for those services provided by in-network healthcare providers. The insured is also required to secure pre-certification authorization for treatments and procedures. Failure to do so will result in reimbursement penalties. Some POS plans offer an open access option similar to the PPOs in that no referrals are needed from the Primary Care Physician when an insured wishes to seek the services of an in-network specialist. In order to reduce costs in providing coverages, some POSs are beginning to include deductibles and co-insurance provisions for in-network services other than routine office visits.

PPO Plans

Considered to be the premier delivery system for healthcare benefits, the Preferred Provider Organization is a form of managed care closest to an indemnity plan. A PPO negotiates arrangements with doctors, hospitals and other providers who accept lower fees from the insurer for their services. As a result, your cost-sharing in the form of co-payments, will be lower than if you go outside the network of providers, where deductibles and coinsurance provisions are the formula of reimbursement. In a PPO referrals are not needed when an insured wishes to see an in-network specialist. This open access or non-gated feature is understandably very attractive to participants.

Here is another notable difference between the PPOs and other forms of managed care plans, and the difference could result in significant savings in a large claim scenario. An insured utilizes the services of a non-network physician for surgery and treatment at an in-network hospital - the physician's services would be considered non-network, but the hospitals charges would be processed as in-network. Using the same example with a POS plan format however, would result in all services, both physician's AND hospital, being processed as out of network charges. The difference will result in thousands of dollars more out of pocket which the insured must pay.

 

 

Important Note - The information on this site is general in nature. Any description of coverage is necessarily simplified. Whether a particular loss is covered depends on the specific facts and the provisions, exclusions and limits of the actual policy. Nothing on this site alters the terms or conditions of any policies. You should read the policy for a complete description of coverage. Coverage options, limits, discounts and deductibles are subject to availability and to individuals meeting underwriting criteria. Not all features available in all areas.