The range of health care organizations includes facilities that provide treatment, tests, rehabilitation and therapy. It also includes the plans we rely on to help pay for our health care. Whether you buy your own health insurance or get coverage through your employer, understanding the different health-care organizations -- PPO, HMO, consumer-driven, POS and fee-for-service -- can help you choose which best meets your needs.
Preferred Provider Organizations
Their large networks of physicians, clinics, laboratories and hospitals, combined with freedom to choose specialists, facilities and primary care physicians without referrals have made preferred provider organizations, or PPOs, popular among those who dislike restrictions. PPO participants pay a co-pay of $10 to $30 for office visits, according to eHealthInsurance, and usually pay a deductible for out-of-network services before PPO coverage takes over. WebMD advises that the ability to choose where to seek medical attention makes PPO monthly premiums higher than other types of healthcare organizations. You may also have to deal with claim forms and reimbursement when you go out-of-network.
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Health Maintenance Organizations
HMOs, or health maintenance organizations, limit their coverage to doctors and facilities in their network. They require participants to choose a primary care physician to orchestrate their care. The primary care physician must issue referrals for a patient to be approved for diagnostic tests and to see specialists, which makes going to a urologist or dermatologist more complicated than PPO participants experience. Should your primary care physician leave the HMO, you must find a new one. Premiums for HMO coverage, according to Medical Mutual of Ohio, generally are lower than those charged by other plans, and office-visit co-pays are standard patient costs. However, HMOs pay nothing toward out-of-network care, except in some emergencies. They may also limit the number of treatments, time spent in hospital and tests per year.
Consumer-Driven, High-Deductible Health Plans
One type of healthcare organization combines the freedom of a PPO with the lower premium of an HMO: the consumer-driven health plan, or CDHP. Also called high-deductible health plans, CDHPs have a deductible ranging from at least $1,250 for individuals to $2,500 for families, according to the National Business Group on Health. Once you have paid this designated amount, the plan pays 100 percent of the cost of medical treatment, and co-pays disappear. To help participants meet this deductible, employers of CDHP participants deposit tax-free money into an HRA -- health reimbursement arrangement or account. HDHP participants or their employers make pre-tax deposits into a health savings account, or flexible spending account. The IRS sets maximum contribution limits for health savings accounts, which employees can take with them when they change employers. Employers cap HRA contributions that employees forfeit if they leave. Unused amounts in both accounts can roll over to the next plan year.
Point-of-service health plans are hybrid versions of HMOs and PPOs. As with HMOs, in-network care has no deductible and low co-payments, and is guided by a primary care physician. Point-of-service plans also offer PPO-like out-of-network benefits. Participants face high co-payments and must meet a deductible for non-network care, unless referred by their primary care physician. They also must pay associated bills and submit reimbursement claims. According to Bankrate, POS participants pay lower premiums than those in a PPO, but more than those with HMO coverage.
According to Kiplinger, fee-for-service health insurance policies cost the most. Although they have no network restrictions, they limit what they pay for basic and major medical coverage. The amount these policies pay varies by plan provider. For example, a plan may pay 100 percent for a hospital stay, but only 75 percent of the physician or lab charges related to that stay, or impose a 20 percent deductible for the first $5,000. Fee-for-service-plan premiums correspond to the deductible: The lower the deductible, the more your premium costs. When doctors don't invoice the plan directly, patients must pay upfront and file claims to be reimbursed.