Recently, there has been an influx of consumer-directed health plans, introduced in an effort to give the consumer more control of their health care. Tightly controlled health maintenance organizations have steadily lost ground over the last decade to preferred provider organizations, which offer greater choice of physicians and hospitals and direct access to specialists -- though at a higher price. One result of the changes in the market has been the continuing consolidation among managed care organizations.
A Health Maintenance Organization (HMO) is an organized plan that provides for your health care. Some plans are very tightly structured so that all care is provided by the HMO's employees in the HMO's hospitals or clinics, while other plans are cooperative agreements among independent doctors, hospitals and other health care providers. A person who belongs to an HMO program will have access to a "primary care provider" who knows the person's personal, family, social, and financial situations well enough to coordinate his/her care in an effective way that will use fewer services. Your primary care provider is available to see you for basic care and for an illness. Primary care providers run tests or prescribe treatments before passing you on to a specialist.
Staff model: in the staff model, physicians are salaried and have offices in HMO buildings. Physicians are direct employees of the HMOs. This model is an example of a closed-panel HMO, meaning that contracted physicians may only see HMO patients.
Group model: in the group model, the HMO does not pay the physicians directly, but pays a physician group. The group then decides how to distribute the money to the individual physicians. This model is also closed-panel.
Open-panel Model: Physicians may contract with an independent practice association (IPA), which in turn contracts with the HMO. This model is an example of an open-panel HMO, where a physician may maintain his own office and may see non-HMO members.
Network model: in the network model, an HMO will contract with any combination of groups, IPAs, and individual physicians. Since 1990, most HMOs run by managed care organizations with other lines of business use the network model.
Preferred Provider Organizations (PPO) are networks of doctors, hospitals, and other healthcare providers. The health plans associated with PPOs save you money when you use a provider within the network, but they will also provide you with coverage when you get services from outside the network. PPO plans are a combination of managed care and traditional indemnity plans.
In a PPO plan you don't choose a Primary Care Provider: this is the major difference between PPO and POS plans. Since you don't have a Primary Care Physician, you don't need a referral for specialist care. There is a higher copayment if you need healthcare from outside of your PPOs network.
The insured members pay a co-payment at the time of each medical service. Each person will also have a yearly deductible to pay out of his/her pocket, before the insurance company will start paying medical fees. The insurance usually pays a percentage of the medical fees (often 80%) for the in-network doctor, with the patient responsible for the remainder of the bill. If the person wants to see an out-of-network doctor, he/she may do so without permission; but the deductible for out-of-network services may be higher and the percentage the insurance will pay may be lower. In other words, the patient will be responsible for a greater part of the fee. This encourages the people insured with a PPO to use the physicians, other medical providers and hospitals in their network.
Advantages of a PPO include the flexibility of seeking care with an out-of-network provider if so desired, even though it is more out-of-pocket expense for the patient. PPO networks also have prescription services which provide prescription drugs at a reduced cost. The overall premium for a PPO is less than for individual health coverage and will often include more covered medical services. There is a large network of medical providers representing large geographic areas.
A POS (Point of Service) Insurance Plan allows the insured person to choose providers or specialists with the POS plan's networks referred by their primary care physician, or to self-refer to a provider outside the network. The insured person will receive the highest level of benefits if it uses providers inside the network. With POS health insurance you have greater freedom, but at a higher cost.
When you enroll in a POS insurance plan you are required to choose a primary care physician to monitor your health care, but the physician must be chosen from within the health care network. The primary care physician then becomes your "point of service". For medical visits within the health care network, paperwork is completed for you. If you choose to go outside the network, it is your responsibility to fill out the forms, send bills in for payment, and keep an accurate account of health care receipts.
If a doctor refers a patient out of the network the plan usually pays all or most of the bill. If a POS member self-refers to doctors or specialists outside the network, they will have to pay a predetermined amount of coinsurance.
In addition to offering added freedom, POS plans have no deductibles and limited co-payments for in-network coverage. With a PPO, members are required to meet deductibles and pay co-payments. Point of Service plans, on the other hand, have no deductibles and noticeably smaller co-pays.
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