Many years ago, Americans received medical care through a fee-for-service agreement with their health care providers (Belling, B. 2004). Private insurance company’s allowed their consumers to choose a health care provider of their choice and would pay a percentage of the fees charged after applying a deductable for health care services. This type of service permitted an individual to see a doctor only when it was absolutely necessary.
The idea of preventive care services was not enforced due to the high premiums required by insurance companies and the possibility of having a health care provider who was not in contract with a patient’s insurance company. Today, insurance companies are offering a more acceptable term of use for their policies (Belling, B. 2004). They are requiring that consumers join a managed care plan when buying into their insurance. This allows the possibility of lower fees for the consumer and a primary doctor for the patient. In this paper we will be discussing three types of managed care plans: PPO plans, HMO plans and POS plans.
PPO’s, HMO’s and POS: Three Types of Health Plans
Many individuals have questioned the role of Managed Care Plans and their usefulness (Belling, B. 2004). What is a Managed Care Plan? Simply stated; a Managed Care Plan is a system provided by insurance companies in which financing and delivery of health services are controlled when enrolled in a specific type of health plan. This type of plan encourages consumers to use a provider within a network which is determined by the insurance company. Insured individuals who choose to participate in this type of plan may receive incentives that may make the difference in affordability for the patient. Some incentives might include a lower premium, or having the insurance company pay a higher percentage of the charges when using a network provider. This type of plan may also include preventive care services that might not be available on some other plans or may be available at a higher cost (Belling, B. 2004).
There are many types of Managed Care Plans (American Heart Association. Managed Care Plans.2010). Some might allow the use of only certain providers and detail the payment of those providers while other plans may allow a patient to pick a provider but provide extra benefits when using their network provider. In choosing a Managed Care Plan, one must remember that all Managed Care Plans have the same idea of controlling cost. Insurance companies may achieve the cost controlling effort by implementing the following: primary care providers, referral requirements, prior authorizations and case management (American Heart Association. Managed Care Plans.2010).
With so many plans available, how is can a consumer choose the correct one? Three of the more popular plans are PPO’s, HMO’s and POS. Knowing the difference of the three can help distinguish the need of the consumer from confusions. In depth research of each type of plan can also help a consumer plan and achieve the goals necessary for a healthy future and in doing so can offset the cost of possible medical issues in the future.
PPO’s Managed Care Plan
What are PPO’s? PPO’s or Preferred Provider Organizations are plans in which the insurance company has a contractual arraignment with the service provider (PPO Health Insurance.2010). A service provider such as a hospital, physician, and other healthcare professionals under a contractual plan in a PPO is considered to be a provider network of an insurance company. There are advantages and disadvantages to using this type of plan and this must be weighed in before purchasing (PPO Health Insurance.2010). Some advantages of PPO’s are as follows:
1) Members of this type of Managed Care Plan do not have primary care physicians nor do they have to use an in network provider for their specific care nor do members require a referral to see a specialist.
2) PPO’s may offer financial benefits to the consumer. A PPO plan can offer a lower deductible, a lower premium and higher re-imbursements.
3) Services provided by an in-network provider are contract and controlled.
Some disadvantages of PPO’s are:
1) While PPO’s are less restrictive in choosing network providers, they do have a tendency to incur higher out of pocket expenses for the consumer.
2) Benefits are reduced due to the non contractual relationship between the provider and the insurance company. The further you move out of the network, the higher the fees.
HMO’s Managed Care Plan
A Health Maintenance Organization or HMO is a plan which enters into a contractual agreement with a health care provider (American Heart Association. Managed Care Plans.2010).
HMO’s require different requirements to its members than that of a PPO. In choosing an HMO, members would have to look at the advantages and disadvantages of using an HMO. Some of the advantages are:
1) Members are provided with healthcare providers within the network for their health care needs.
2) Members are provided with Primary Care Physicians or PCP for all of their health care needs. This requirement allows the PCP to manage all of the members needs and make adjustments to a member’s medical care as needed.
3) A PCP authorizes all aspects of a members medical care allowing the member to know when, where, why and how a procedure or test is needed. They organize, coordinate and authorize all phases of a member’s health care.
4) In seeing a PCP, a member can be assured of payment for medical care. This type of plan will offer the lowest premium or no premium for a consumer and health benefits with the lowest out of pocket expenses.
Some of the disadvantages in selecting an HMO are:
1) Unlike a PPO, members cannot choose a doctor that is outside of the HMO’s network. In doing so, services will not be paid.
2) In order for a member to see a specialist, a referral from the Primary Care Physician must be given. If a member feels the need to see a specialist and it is not authorized by the PCP, the HMO will not pay for it.
3) This type of plan is the most restrictive of the three plans in this paper because they do not allow the member to choose a provider outside of the network. If a patient has been seeing a health care provider and has recently joined an HMO, the patient must investigate whether or not the health care provider is part of the HMO. If the health care provider is not, the patient must use a health care provider within the HMO’s network (American Heart Association. Managed Care Plans.2010). .
4) In using HMO’s, members must usually pay the required premium before services are rendered.
POS Managed Care Plan
A Point-of-Service Managed Care Plan or POS is a contractual plan that allows its members to choose a specialist that is referred by its PCP or for a member to self direct to a specialist (POS Insurance Plans.2010). The member will receive the highest level of benefits if the member chooses a specialist within its own network and can also receive a discount if the member chooses a specialist outside of the network. A POS can give the member the greatest flexibility in choosing his or her health care. However, as with all plans, it too has advantages and disadvantages (POS Insurance Plans.2010). Some of the advantages are:
1) Members are required to choose a primary health care provider or PCP who will monitor the member’s health care. The PCP will become the members’ point of service for their medical needs.
2) For health care provider visits within the network, the paper work is generally done for the member allow the member ease in filing requirements.
3) A POS will pay all or most of the bill if a PCP provider refers the member to a specialist.
Some disadvantages that are common when using a POS plan are:
1) If a patient chooses to see a provider outside of the network, a member will be responsible in sending out the proper forms, sending the insurance company the bills for proper payment and keeping accurate records on transactions and actions.
2) A predetermined amount of co-insurance or deductible must be met when a member sees a provider outside of the network.
3) Members must clarify and verify the services that are covered by the insurance company when using providers outside of the network.
4) This plan is the most expensive out of the three plans discussed. Higher premiums and lower re-imbursements are paid. Also, higher deductibles might be incurred upon using this plan do to its flexibility.
Deciding on a Managed Care Plan isn’t easy (How to Choose a Managed Care Plan for Your Company.2009). Due to the rising cost of health care, more and more insurance companies are now requiring its members to join a Managed Care Plan which will allow the insurance company to control its costs. A consumer should look into affordability, scope of coverage and quality of coverage when choosing their Managed Care Plan and members should also think of both present and future terms when deciding on a Managed Care Plan (How to Choose a Managed Care Plan for Your Company.2009).
Belling, B (2004). What is Managed Care? Retrieved August 27, 2010 from http://oci.wi.gov/articles/0101mgcr.htm
(2010) American Heart Association. Managed Care Plans. Retrieved August 27, 2010 from http://www.americanheart.org/presenter.jhtml?identifier=4663, n.d.
(2010) PPO Health Insurance. Retrieved August 26, 2010 from http://www.healthinsurancesort.com/ppo.htm
(2010) POS Insurance Plans. Retrieved August 27, 2010 from http://www.mamashealth.com/insurance/posplan.asp
(2009) How to Choose a Managed Care Plan For Your Company. Retrieved August 28, 2010 from http://www.allbusiness.com/human-resources/benefits-insurance-health/771-1.html