The Difference Between PPO, HMO & POS

Preferred Provider Organizations (PPO), Health Maintenance Organizations (HMO) and Point-of-Service plans (POS) are all forms of managed care plans. The type of managed care insurance you have determines the cost and extent of coverage, as well as the physicians you have access to.

Description

• Managed care insurers maintain a network of providers that patients are encouraged to use. Use of network doctors is usually mandatory in an HMO plan, unless the patient receives a referral from the primary care provider (PCP). Visiting out-of-network doctors outside is allowed in a PPO or POS, but there is a higher charge for the services.

Coverage

• In most HMOs, the insurer pays a large percentage of the cost for benefits described in the plan, while the insured pays a pre-determined co-payment at each doctor's visit. In many PPO plans, patients must submit a claim and await approval before receiving reimbursement for health services. POS plans vary by provider and may resemble an HMO or PPO, using a combination of co-payments, coinsurance and deductibles.

Deductibles

• A deductible is the minimum out-of-pocket expenses the insured must pay before submitting claims to the insurance provider. Deductibles are a common feature of PPO insurance, and may apply to coverage received from out-of-network providers in a POS plan.

Premiums

• Insurance companies negotiate with network physicians to control the cost of coverage, which makes health services from non-network providers more expensive. For this reason, HMO's have the lowest premiums, while PPOs and POS plans have higher premiums due to the greater accessibility to health care providers outside of the network.

Considerations

• HMO insurance plans typically place more emphasis on preventive care than other managed care systems. Without coverage for preventive medicine, essential treatments, including routine check-ups, immunizations and mammograms, must be covered out-of-pocket.