Choosing Between HMO and PPO Insurance

What Are EPO Insurance Plans? With an EPO policy, the insurance company negotiates lower payment rates with a predetermined group of doctors, usually within a local health care system. In exchange for reduced payments, doctors agree to a specified network of doctors and accept responsibility for any potential claims against the health plan. This can mean that a doctor may develop a network within a state, for instance.

Why Purchase EPO Insurance? The primary advantage of an EPO insurance is that there is a reduced out-of-pocket cost. This is because the organization pays the entire balance amount, or “premium”, to a designated medical care organization. The organization then pays for the physician’s services that are rendered by the physician within the network. Therefore, it is important to evaluate the cost sharing arrangement, and determine if it meets your health maintenance objectives.

How Does An EPO Insurance Plan Work? As described above, EPOs provide “network” care through a physician purchasing group. This group generally consists of hospitals within the participating state, as well as some out-of-network specialists. If a doctor participates in an EPO plan from a participating hospital, the specialist also becomes a part of the network.

How Can I Get An EPO? To get started, contact one or more hospitals within your state to inquire about whether they participate in an EPO. If an EPO policy is offered, many hospitals will list it on their website, and call for additional information. Many doctors become a part of an exclusive provider organization when they accept employment with a particular HMO or PPO health care plan network.

What Are The Differences Between HMO and PPO? Both HMO and PPO are preferred provider organizations, but the ways in which they operate vary significantly. An HMO is more closely tied to the health care industry and its regulations, while a PPO is not. HMO and PPO plans differ in several ways, including:

Health Maintenance Organization (HMO) rules include a minimum amount of benefits, a maximum amount of covered services, a specified time period in which a patient must enroll, and restrictions on who can enroll. As such, HMOs provide more rigid guidelines than do PPOs. For example, you cannot be a patient in an HMO before you have received a referral from a primary care physician. In addition, if you enrol in an HMO or PPO plan during a time period in which you were a patient in an HMO or PPO plan, you lose the flexibility that those plans provide, such as the ability to switch health plans. HMO and PPO plans may have a much looser criteria for eligibility and enrollment than would a Point of Service (POS) plan.

Another difference between HMO and PPO plans is that PPO plans require prior authorization or pre-certification for most elective hospital admissions, office visits, and surgeries. On the other hand, an HMO will only require a referral for covered services. This is because an HMO does not offer any specialty care, and all medical providers must participate in the HMO’s network. If an individual does not want to participate in a networked health care plan, then he/she may choose one that is not a member of the HMO. PPO plans typically require referrals for in-network services, but they have more freedom in setting their own deductibles and premiums.

In addition to requiring a referral for services, HMOs and PPOs also share a common condition: a limit on the number of doctors a consumer can see. In an HMO, one can see up to five doctors; in a PPO, one can see as many doctors as one wants. Although these service restrictions are not as restrictive as they once were, they do limit a consumer’s freedom of choice. In addition, PPO plans may require physicians who participate in their network to accept insurance payments by direct deposit. Consumers who need to find a new doctor should consider both HMO and PPO health plan options, as they both offer great freedom of choice and a low price point.

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