Most people with health insurance – whether through an employer or self-insured – have heard the terms PPO, POS and HMO. Unfortunately, most Americans have no idea what they mean and even more importantly, how they impact their health choices. Learning a little bit about healthcare terminology can help you navigate the confusing world of health insurance, making it that much easier to provide for you and your family.
Managed Care Networks
Generally, health insurance is provided through some sort of managed care plan. Basically, what this means is that a “network” of healthcare professionals and providers is formed to serve a particular group of people. Networks include everyone from doctors, hospitals and clinics to pharmacies. These providers make up a health plan’s network.
Preferred Provider Organizations (PPOs)
A preferred provider organization or a PPO, is a health care plan that has contracted with several preferred providers in its network. You do not have to choose a primary care physician (PCP) and in addition, you have the option of choosing any provider within the network and you can see a specialist without a referral. A PPO provides the flexibility to pick and choose from several network participants while only being responsible for a deductible and co-pay. However, if you choose to visit a doctor who is not included in the network, then you are more than likely going to pay a higher amount and are expected to pay the doctor directly before getting reimbursed.
Health Maintenance Organizations (HMOs)
Health maintenance organizations, or HMOs are another very common type of health care plan. With an HMO, care is limited to the plan’s network. An HMO requires that you have a primary care physician (PCP) who basically oversees all of your health care needs. Your PCP is your doctor for all basic healthcare needs. There are family physicians, gynecologists, pediatricians and even internal medicine physicians to choose from. In the event you need to see a specialist, your PCP must provide a referral. However, you can choose to see a specialist outside of the network, but you will be responsible for the cost of that care.
Point of Service Plan (POSs)
A point of service plan is another type of managed care plan in which some of the characteristics of the HMO are combined with the PPO. As such, the POS still requires that you choose an in-network primary care physician. However, a referral from your PCP gives you the option of visiting a specialist outside of the network and your insurance will more than likely pay the entire cost of that treatment. This is unlike both the HMO and the POS, which require you to pay for outside network care, even with reimbursement. There is more flexibility with a POS plan to see out of network specialists, however, it can be a bit more expensive than the HMO.
Understanding the terminology and learning the differences between HMOs, PPOs and POSs can helpful make the right decision when choosing a healthcare plan for you and your family.