Do I Have an HMO or PPO?

And Why Does it Matter?

Healthcare plans come in different shapes and sizes and choosing the right one for you really matters. You may have an HMO or a PPO, (or even an EPO or a POS). If you are confused by these terms, then you’re not alone. Many people reach out to us with questions about their plans. Here is a simple breakdown that explains what an HMO or PPO plan means and how plan types can affect the outcome for your claims.

The Basics

There are huge variances between different types of insurance policies and what they will cover but we want to keep it simple. When you choose your healthcare plan, either through an employer or privately, the first step for most Americans is a choice between the two most common organization types:

• Health Maintenance Organization (HMO)
• Preferred Provider Organization (PPO)

Other less common plan types include Point of Service (POS) and Exclusive Provider Organization (EPO).

The key difference between HMOs and PPOs is that a PPO plan is more flexible and allows you to see healthcare providers both inside and outside your plan’s network, while an HMO plan only covers in-network treatment (with exceptions detailed below).

How Does a PPO Work?

PPO plans do have provider networks, just as HMOs do, but also allow patients the flexibility to receive treatment outside their network. In such cases, they will often pay you back for a portion of your out-of-network costs. It is useful to bear in mind that they will only reimburse once you’ve met your deductible. These can range from $0-$20,000 but the average for PPO deductibles is $1,415 for an individual.

PPO policies do not reimburse you for 100% of the cost of out-of-network care in most cases. Insurers use a complicated formula to calculate the dollar amount you get back on each claim. We’ll talk more about this in a later blog!

There is a less common policy called a POS, a hybrid between a PPO and an HMO that also allows reimbursement of out-of-network bills.

How Does an HMO Work?

An HMO plan offers access to a network of doctors, hospitals, and healthcare providers who have contracted to work with your insurance company and to charge reduced rates for their services. The disadvantage of an HMO plan is that it limits choice to only healthcare providers that have elected to participate in the network.

If you choose to be treated by a provider who is not participating in that network, your HMO will not reimburse you for the care you receive, except in certain extenuating circumstances, such as a medical emergency. (The Affordable Care Act mandates insurance companies to cover emergency care even if treatment is out-of-network).

Unfortunately, it is common for patients to receive treatment without knowing it is out-of-network. In-network hospitals will often use out-of-network doctors who will bill you directly for services that are not covered by your HMO. If in doubt, you should contact your insurance and get authorization for treatment in advance.

Exceptions

There are other exceptional situations where some HMOs will pay for certain types of out-of-network care. For example, if there is no healthcare provider available within a reasonable traveling distance of your home, it is possible that your HMO will reimburse the cost of treatment. In many cases, your insurance will require prior authorization in writing before you get treatment if they are to pay you back for the care.

Let’s not forget Kaiser

Most Kaiser policies are HMOs, where you are only covered if you receive treatment from a Kaiser doctor at a Kaiser facility. It is possible to request a pre-authorization for out-of-network care via your primary care doctor or other Kaiser specialist but we rarely see these requests granted. Only in exceptional circumstances will Kaiser cover any non-emergency care outside the Kaiser network.

Blurring the lines — EPOs

To make it more complicated, insurance companies are confusing the already confused playing field by blurring the distinctions between plans. Kaiser Health News has reported on this new trend.

“The lines that distinguish HMOs, PPOs, EPOs and POS plans from one another have blurred, making it hard to know what you’re buying by name alone–assuming you’re one of the few people who know what an EPO is in the first place. (Michelle Andrews, KHH)”

An Exclusive Provider Organization (EPO) is a relatively new type of plan that sounds similar in name to a PPO but, in fact, removes out-of-network benefits. This often causes confusion. In 2017, Anthem offered EPOs to Californian customers, even converting existing PPO policies to EPOs without advertising that the coverage had substantially changed. Subsequent legal action claimed that the notices sent to existing Anthem customers informing them of the change were unclear, and many members were not made aware that their new EPO plans did not include out-of-network benefits.

Four Basic Questions:

If you are looking to choose a plan, what are the questions you should ask?

• What are the plan restrictions on out-of-network care? (Are there exclusions for preventive care, acupuncture, or other specific types care?)
• What is your out-of-network deductible?
• How does the plan calculate how much you get paid back for out-of-network care?
• Do you need a pre-authorization for out-of-network care?

If you need any help filing your out-of-network claims to your new PPO policy, we are always happy to help. Get in touch with us at support@getbetter.co