Choosing between Network Types is an important consideration when choosing a health insurance policy. I am speaking about the alphabet soup you will hear about when discussing health insurance with an agent.
In this article, the focus is on three terms: PPO, HMO and POS.
All you really need to know about these terms is that they affect which types of doctors you can see.
Definitions of Network Types
Insurance is regulated at the state level. Rules for health insurance can vary widely within states, so there are no standard definitions for network types.
But Teresa Mears provided some very meaningful definitions in her article. I will paraphrase her network types definitions below:
PPO (Preferred provider Organization): The primary care physician does not need to give a patient a referral to see a specialist. Some coverage may be available out-of-network.
HMO (Health Maintenance Organization): The primary care physician is the gatekeeper. He alone refers patients to specialists. There is not usually out-of-network coverage available.
POS (Point of Service): The primary care physician as the gatekeeper. Patients need specialist referrals from the primary care physician. Some coverage may be available out-of-network.
PPO: the most flexible of the network types
Let’s say you need a surgery. Your primary care doctor tells you it is a minor procedure, and he recommends a good surgeon. You can take the doctor’s recommendation, or you can choose between all of the surgeons in the PPO network that specialize in the particular procedure.
If you are a PPO subscriber, you will have this freedom. You can take the primary care physician’s recommendation and get a referral. Or, you can go straight to the specialist yourself without first speaking to your family doctor. If you are suffering from Acne, then you can go see that dermatologist your friend recommended.
The dermatologist doesn’t even have to be included in the insurance company’s network! You can call ahead and see if the doctor takes your PPO insurance. Just know that you will probably pay more for your visit if you see a specialist out of network.
For more information, read this article.
HMO: the most rigid of the network types
Let us revisit the surgery example. Your family doctor refers you to Surgeon A.
You suggest Surgeon B because Surgeon A is not well recommended. The doctor tells you you can’t see Surgeon B because he’s not covered under your HMO plan. Then you find out that there are other surgeons in the network that are highly recommended. So you choose another surgeon from the list of your HMO’s providers.
In a PPO, you can choose any surgeon. Of course, the surgeon has to accept your health insurance. If your surgeon accepts your health insurance, then your insurance company will cover a percentage of the costs–in-network and out.
HMO customers don’t have this kind of flexibility. They must choose specialists in their prescribed network, and no out-of-network coverage is generally available. Don’t expect the insurance company to help out with out-of-network costs if you’re a HMO customer. plus, you have to go to the family doctor first even befor the surgery talks. He is the gate keeper.
I’m not saying you don’t have choices of good doctors if you have a HMO. I am saying that you will probably have problems seeing a a well-recommended doctor if he is not under the HMO network umbrella.
For more information, read this article.
POS: the hybrid of the network types
POS plans are the perfect matchup of the rigidity of a HMO plan with the flexibility of a PPO plan. For starters, if you are enrolled in a POS plan, you will have to assign a family doctor. This family doctor will be the gatekeeper and manage all of your medical care.
If you need a surgery, you have to first visit the family doctor. You can take the family doctor’s recommendation and see a surgeon in-network. Or, you can see a surgeon outside of the POS plan network. Like a PPO, the POS plan will cover some of the costs of the fees of the surgeon. Sometimes, however, a family doctor will make a referral for a patient to see an out-of-network provider. The insurance company will pick up the tab if this is the case.
Network Types: which is the best?
This all depends on many factors. If price is a factor, then a HMO is the way to go because these network types are generally the least expensive. Just know that these plans feature fewer providers. Don’t worry–this network type has plenty of choices!
If you want freedom to see more doctors, then choose either a PPO or POS plan. These plans cover out-of-network provider costs at varying rates, and you do not always have to have a referral from a primary care physician.
Here is my advice. Before choosing ANY health plan, find out if you’re primary care doctor and medicines are covered. As your medical needs increase, find out which specialists are covered in-network and out-of-network, and see which specialist is the most well-recommended and affordable. Go to this specialist.
Philip Strang is the resident copywriter for American Exchange. He splits his time between enrolling persons in qualified health plans and writing on topics pertaining to the Health Insurance Marketplace.