HMO vs PPO vs POS vs EPO: What’s the distinction? – Model Slux

Among the many many components to contemplate whenever you’re searching for particular person medical insurance protection is the kind of managed care plan. HMO vs PPO vs EPO vs POS: To decide about which works finest in your state of affairs, it’s essential to know the variations between the choices and the way they’ll have an effect on your funds and entry to medical suppliers.

What’s managed care? And why do well being plans have managed care designations?

Managed care is a medical supply system that makes an attempt to handle the standard and price of medical providers that people obtain. Every kind of managed care limits, to various levels,

• the variety of suppliers from which a affected person can select,
• whether or not the affected person has to make use of a main care doctor, and
• whether or not out-of-network care is roofed underneath the plan.

Some managed care techniques try to enhance well being high quality, by emphasizing the prevention of illness.¹

In 2023, the  majority of privately insured people had been in some type of managed care plan.² Even within the Medicaid and Medicare techniques, managed care is enjoying an more and more massive function: Greater than two-thirds of the people enrolled in Medicaid had been lined underneath non-public Medicaid managed care plans as of 2021.³

And practically 49% of Medicare beneficiaries had been enrolled in non-public Medicare Benefit plans as of 2023⁴ – a proportion that has been steadily rising over the previous decade.⁵ (Medicare Benefit plans are managed care plans.⁶)

4 forms of managed care

As you’re choosing a well being plan, you could discover that the plan is labeled as an HMO, PPO, EPO, or POS. These are classes of managed care, which is how nearly all trendy medical insurance is organized. Right here’s what these acronyms stand for:

• HMO – Well being Upkeep Group
• PPO – Most well-liked Supplier Group
• EPO – Unique Supplier Group
• POS – Level of Service

What’s an HMO?

In case your protection is a Well being Upkeep Group plan, you’ll typically solely have protection when you use a medical supplier who’s in-network with the plan, apart from emergencies. You’ll possible want to decide on a main care doctor (PCP) or your insurer will choose one for you. That particular person will function a “gatekeeper,” that means that you just’ll typically have to see your main care doctor for a referral earlier than you’ll be able to see a specialist.

Nevertheless, some trendy HMOs don’t require a PCP referral to see a specialist, so that you’ll need to perceive the small print of the precise plans you’re contemplating.⁷

As of 2022, 46% of Market plans had been HMOs.⁸

What’s a PPO?

Underneath a Most well-liked Supplier Group plan, policyholders obtain discounted costs from in-network healthcare suppliers partnered with the PPO, which implies that the supplier will write off a portion of their billed quantity, underneath the phrases of the community settlement with the well being plan. A referral to a specialist is mostly not required, which suggests policyholders can see a specialist with out seeing a main care physician first.

PPOs will cowl out-of-network care, however the deductible and different out-of-pocket bills are usually increased (usually considerably so) for out-of-network care. So policyholders who use a supplier outdoors of the PPO plan’s community usually pay extra for the medical care. And they’re additionally topic to stability billing from the out-of-network medical supplier, which implies that the supplier can invoice the affected person for the complete quantity of their prices, with out having to jot down off any of the invoice (notice that the No Surprises Act prohibits stability billing in emergencies and in conditions the place an out-of-network supplier is working at an in-network facility⁹).

As of 2022, solely 14% of Market plans had been PPOs.⁸

What’s an EPO?

An Unique Supplier Group plan solely covers in-network care (besides in emergency conditions), however policyholders will typically not want to select a main care doctor, nor will they should get a referral to see a specialist. So the policyholder can select to see any specialist within the plan’s community with no need to see a main care physician first. Since out-of-network care isn’t lined, the affected person pays full worth for out-of-network providers that aren’t topic to the No Surprises Act.

As of 2022, 36% of Market plans had been EPOs.⁸

What’s a POS?

A Level of Service plan usually (however not all the time) requires policyholders to decide on a main care doctor and get referrals with a view to see a specialist. These plans do cowl out-of-network care after a referral from the PCP, however out-of-pocket prices will be considerably increased for out-of-network care than for in-network care, and the out-of-network supplier can stability invoice the policyholder except it’s a state of affairs through which the No Surprises Act protections are relevant. POS plans aren’t frequent.

As of 2022, solely 4% of Market plans had been POS plans.⁸

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What’s the distinction between an HMO and a PPO (and different forms of managed care)?

In terms of the variations between the forms of managed care, it usually boils down to 2 components: entry to suppliers, and out-of-network medical care.

Entry to suppliers

All HMO, PPO, EPO, and POS plans have networks of medical suppliers (medical doctors, hospitals, and many others.) which have a contract with the well being plan through which the provider agrees to simply accept a negotiated worth for the providers they provide. Some plans will solely pay for non-emergency care when you obtain care from an in-network supplier, whereas different plans could cowl a number of the invoice when you see an out-of-network supplier.

You’ll usually see easy comparability charts that present the “guidelines” for the several types of managed care. In a nutshell, these summaries typically say that HMOs and POS plans require a referral from a main care physician with a view to see a specialist, whereas PPOs and EPOs don’t, and that PPOs and POS plans cowl out-of-network care, whereas HMOs and EPOs don’t. They will even usually are likely to say that HMOs have decrease premiums, decrease deductibles, and smaller supplier networks, whereas PPOs have increased premiums, increased deductibles, and broader networks.

In actuality, these distinctions are usually blurry, and a lot of these plan administration have developed over time. For instance, some HMO and POS plans do not require a referral to see a specialist. And whereas it’s usually true that employer-sponsored HMOs are likely to have decrease deductibles and premiums and probably smaller networks, that doesn’t maintain true within the particular person/household (self-purchased) market. Learn the small print of any coverage you’re contemplating rigorously.

Out-of-network care

It’s typically true that EPO and HMO plans is not going to cowl out-of-network care except it’s an emergency, whereas PPO and POS plans will present some out-of-network protection. However policyholders ought to all the time take a look at the out-of-pocket prices for out-of-network care as a result of they’ll usually be considerably increased than the out-of-pocket prices for in-network care.¹⁰

For perspective, the median in-network deductible for plans bought through HealthCare.gov was $750 in 2021, and it dropped even decrease than that after the American Rescue Plan made extra strong protection extra reasonably priced.¹¹

(Word {that a} large a part of the explanation median deductibles are so low for in-network care is the numerous variety of people who find themselves enrolled in plans with built-in cost-sharing reductions (CSR).¹² For eligible enrollees, CSR advantages cut back out-of-pocket prices and improve the actuarial worth of a plan. However these provisions are solely required to use to in-network care, in order that they don’t cut back out-of-network deductibles.)¹³

So though PPO and POS plans do typically cowl out-of-network care, you may discover that you just solely get a profit from that in case your out-of-network prices are significantly excessive. And a few plans with out-of-network protection don’t put any cap on whole out-of-pocket prices for out-of-network care.

(The ACA requires well being plans to cap out-of-pocket prices for important well being advantages obtained from an in-network supplier – the cap is $9,450 in 2024¹⁴ – however there aren’t any limits on how excessive out-of-network prices will be, even when the plan gives out-of-network protection.)

Availability of managed care choices varies by location

It’s essential to remember the fact that you could not have entry to a number of forms of managed care plans. If you happen to get your protection from an employer, your choices will probably be restricted to the plans that your employer gives. And when you purchase your personal medical insurance, your choices will depend upon what’s provided by insurers in your space.

For instance, there are some areas of the nation the place the one plans accessible by means of the Market are HMOs (or HMOs and EPOs). As of 2022, greater than eight out of ten Market plans nationwide had been both HMOs or EPOs.⁸

There are nonetheless some areas the place the one accessible plans are PPOs (Wyoming is an instance¹⁵), however that is uncommon.

General, PPOs are a lot much less frequent within the particular person market than they was once, whereas HMOs and EPOs have gained appreciable market share during the last a number of years.¹⁶

What may you contemplate when shopping for an HMO, EPO, PPO or POS plan?

Relying on the place you reside, you may not have entry to a number of forms of managed care plans within the Market. However when you do, listed below are a number of components to bear in mind whenever you’re choosing a plan:

1. Be sure you perceive your plan’s protection of out-of-network care

Though a PPO or POS plan will cowl out-of-network care, it’s essential to know how that works. Concentrate on the deductible (which is more likely to be fairly excessive) and the out-of-pocket publicity (which may very well be limitless and not using a cap).

Additionally pay attention to the truth that an out-of-network supplier can and can stability invoice you except it’s an emergency or an out-of-network supplier working at an in-network facility. (Right here’s how the No Surprises Act protects customers from shock stability payments in these conditions).

Which means except lined by the No Surprises Act, though your well being plan could pay for a number of the service (assuming you’ve met the out-of-network cost-sharing necessities), the supplier can invoice you for the portion of their prices that had been above the quantity the well being plan paid.

And there’s probability out-of-network care isn’t relevant to your protection in any respect, on condition that the massive majority of particular person/household well being plans are HMOs and EPOs, and thus don’t present out-of-network protection except it’s an emergency.

2. Narrowness of networks varies

All 4 forms of managed care plans can have broad, slender, or mid-size supplier networks. Don’t assume something. As a substitute, you’ll need to actively evaluate the supplier networks of every plan you’re contemplating, to see whether or not your particular suppliers are in-network.

If you happen to don’t presently have any suppliers, it’s a good suggestion to see whether or not every plan you’re contemplating has in-network hospitals and medical workplaces that might be handy if you find yourself needing medical care. It’s additionally a good suggestion to make the most of the preventive care advantages which might be supplied with zero cost-sharing on all ACA-compliant plans.¹⁷ It will typically require discovering a main care supplier who may also help you receive preventive providers.

3. Managed care is completely different within the particular person market

Particular person/household plans aren’t the identical as employer-sponsored plans, and that features the supplier networks and managed care guidelines. You could have had an employer-sponsored plan provided or administered by a selected insurer, however don’t assume that particular person/household plans from that insurer may have the identical supplier community or managed care guidelines. (For instance, whether or not or not a referral is required.)

4. Referral necessities range

Though you might have heard that HMOs and POS plans require a referral from a main care doctor with a view to see a specialist, that’s not essentially true. Once more, you’ll have to verify the specifics of the plans you’re contemplating.

(And there are professionals and cons to referral necessities. On one hand, they imply a further workplace go to, which provides to your prices. However however, your PCP may also help to make sure that you’re seeing the right specialist, and may coordinate the care you obtain from a number of specialists.)

Referrals are typically confused with prior authorizations (pre-authorizations), however these are two completely different ideas. A referral comes from a main care doctor, whereas prior authorization must be obtained from the well being plan itself. Well being plans can set their very own guidelines when it comes to which providers require prior authorization. All 4 forms of managed care plans – HMOs, PPOs, EPOs, and POS plans – can and do require prior authorization for varied providers. However there’s a variety of variation from one plan to a different when it comes to what providers want prior authorization.

So it’s essential to know your plan’s guidelines, and to make sure that your physician has your well being plan data in order that they’ll submit prior authorization requests in your behalf. And if unsure, it’s finest to contact your well being plan earlier than a selected service is scheduled, to ensure you know whether or not prior authorization is important, and in that case, whether or not it has been granted.

Confusion over what’s and isn’t managed care

If you happen to’ve learn this far, you could be questioning why a well being financial savings account (HSA) and a high-deductible well being plan (HDHP) aren’t listed right here. It’s frequent to see these acronyms in articles that evaluate PPO, EPO, HMO, and POS plans – and that leads many customers to imagine that an HSA or HDHP is a type of managed care plan. However neither is.

HSA-qualified high-deductible well being plans (HDHPs) permit enrollees to contribute pre-tax cash to an HSA. (You can’t contribute to an HSA except you’ve got energetic protection underneath an HDHP.) And HDHPs should conform to particular IRS guidelines. The IRS units minimal deductibles and most out-of-pocket limits (that are decrease than what the Division of Well being and Human Companies units for different plans), and limits the providers that the plan will pay for earlier than the deductible is met.

Nevertheless, an HDHP will even be both a PPO, an EPO, an HMO, or a POS plan. The HDHP designation implies that the plan conforms to the IRS guidelines for HSA-qualified plans. And the HMO, PPO, EPO, or POS designation describes the plan’s method to managed care.

Study extra about HSA-qualified high-deductible well being plans (HDHPs).

Louise Norris is an particular person medical insurance dealer who has been writing about medical insurance and well being reform since 2006. She has written dozens of opinions and academic items concerning the Reasonably priced Care Act for healthinsurance.org. Her state well being trade updates are recurrently cited by media who cowl well being reform and by different medical insurance consultants.

Footnotes

1. “Care Administration Program: How Your Healthcare System Can Enhance Affected person Outcomes” WelkinHealth.com, Accessed 2023
2. “Employer Well being Advantages 2023 Annual Survey” p. 10, KFF.org, October 2023
3. “EXHIBIT 30. Proportion of Medicaid Enrollees in Managed Care by State and Eligibility Group” Macpac.gov, October 2023
4. “Medicare Month-to-month Enrollment” CMS.gov, June 2023
5. “Medicare Benefit in 2023: Enrollment Replace and Key Traits” KFF.org, Aug. 9, 2023
6. “Managed Care” Facilities for Illness Management and Prevention. Nationwide Heart for Well being Statistics. Accessed October 2023
7. e.g. “Pathway Necessities –  Fast Reference Information Anthem’s New Community” Anthem.com, February 2022
8. “Insights into the 2022 particular person medical insurance market” McKinsey.com, Aug. 23, 2022
9. “Ending Shock Medical Payments” Facilities for Medicare and Medicaid Companies. Accessed October 2023
10. “What occurs if I want care from a health care provider who isn’t in my plan’s community?” KFF.org, Accessed October 2023
11. “Well being Insurance coverage Deductibles Amongst HealthCare.Gov Enrollees, 2017-2021” U.S. Division of Well being and Human Companies. Jan. 13, 2022
12. “Effectuated Enrollment: Early 2023 Snapshot and Full 12 months 2022 Common” Facilities for Medicare and Medicaid Companies. Aug. 11, 2023
13. “Affected person Safety and Reasonably priced Care Act; Actuarial Worth Calculator Methodology” U.S. Division of Well being and Human Companies. Accessed Oct. 18, 2023.
14. “Out-of-Pocket Most/Restrict” HealthCare.gov Glossary. Accessed October 2023
15. “See Plans and Costs” HealthCare.gov. Accessed October 2023
16. “Insights into the 2022 particular person medical insurance market” McKinsey.com, Aug. 23, 2022
17. “Well being Advantages and Protection, Preventive Well being Companies” HealthCare.gov, Accessed October 2023