Health care delivery models offer the very first layer of confusion for many consumers. Here, we’ll discuss seven common models: HMO, PPO, POS, EPO, PFFS, SNP and ACO and examine the differences between each one.
- What is stands for: Health Maintenance Organization
- What it is: In an HMO plan, you typically must select a primary care physician (or “PCP”) from a local network of health care providers. When you become sick or injured, you must see this provider first.
- If your PCP cannot provide the treatment you need, they will refer you to a specialist that is also part of a local network. The PCP serves as your health care “quarterback,” coordinating your treatment and directing you where to go.
- Example: Bob is experiencing back pain. He visits his primary care physician for an examination. The PCP decides that it would be best for Bob to meet with a chiropractor. The PCP issues a referral for Bob to schedule an appointment with one of the chiropractors within Bob’s network.
- Advantage: HMO plans typically cost less than other forms of insurance.
- Disadvantage: HMO patients are restricted to a network and may not see a specialist without a referral or acquire coverage for services received outside of the network.
- What it stands for: Preferred Provider Organization
- What it is: With a PPO plan, there is usually no requirement to have a primary care physician. Your plan will include a network of various health care providers, including both generalists and specialists, and patients are free to visit any of the providers within that network with no need for a referral. Unlike an HMO, out-of-network care is covered — though it’s typically more expensive.
- Example: Susan is experiencing some stomach pain and digestive problems. She is free to make an appointment with any provider within her network. If she feels that a general practitioner can diagnose and treat her, she can visit any general practitioner in her network. Or, if she feels more comfortable visiting a specialist, she can bypass the general practitioner and make an appointment with any of the gastroenterologists within the network. Or, if she wants to see a provider outside her network, she is free to do so. However, while that visit is still covered, it will be more expensive than seeing an in-network provider.
- Advantage: PPO beneficiaries enjoy greater flexibility than they might with some other types of plans by having the freedom to visit any provider within the network without the need for a referral.
- Disadvantage: The increased freedom of a PPO plan generally comes at an increase in cost. And while PPO patients have the freedom to visit providers outside of the network, doing so can result in decreased coverage.
- What it stands for: Point of Service
- What it is: A Point of Service plan is a hybrid between an HMO and PPO, combining some of the features of each. Patients choose a primary care physician who gives referrals within the network, similar to how an HMO works. When a POS patient goes outside of the network, the plan operates more like a PPO in which the patient may still obtain coverage, but at a higher cost.
- Example: Laura is suffering from joint pain and schedules an appointment with her Primary Care Provider. After evaluating her, the PCP refers Laura to a specialist. Laura can visit that specialist or find a specialist on her own that is outside of her plan’s network.
- Advantage: Thanks to the freedom of receiving care inside or outside of the network, a POS plan offers even greater flexibility than some other plan types.
- Disadvantage: As with an HMO, access to specialized care requires a referral.
- What it stands for: Exclusive Provider Organization
- What it is: Like a POS, an Exclusive Provider Organization combines certain characteristics of HMO and PPO plans. An EPO plan does not require a primary care physician or referrals to see specialists, but patients are restricted to a network of providers as with an HMO.
- Example: Greg has knee problems and may need surgery. He is free to visit any knee specialist he wishes without the need for a referral, provided that specialist is part of his plan’s network.
- Advantage: EPO plans provide access to specialized care without required referrals.
- Disadvantage: Specialized care may be limited due to the network.
- What it stands for: Private Fee-for-Service
- What it is: A Private Fee-for-Service plan is a specific type of Medicare Advantage plan. With a PFFS plan, the insurance company offering the plan determines the level of cost-sharing between the beneficiary and the health care provider. PFFS plans do not require the use of a primary care physician nor do they require patients to seek a referral before visiting a specialist. A PFFS plan may or may not have a network of providers.
- Example: Mark injured his ankle and needs to seek treatment. He is free to visit any health care provider that has agreed to accept the payment terms put forth by Mark’s insurance company.
- Advantage: Many PFFS plans do not have a network. When they do, patients may still be able to receive care outside of the network under the same payment terms, as long as the health care provider has agreed to those terms.
- Disadvantage: There is no guarantee that a health care provider will accept the payment terms of a PFFS as offered by the insurance company.
- What it stands for: Special Needs Plan
- What it is: A Special Needs Plan is a type of Medicare Advantage plan that restricts membership to patients with specific diseases or health care needs. The benefits offered and the list of participating providers in an SNP are customized in order to serve the specific needs of the beneficiaries. SNP’s typically require a primary care physician or at least require patients to have a care coordinator that will serve a similar role. Most Special Needs Plans require a referral to see a specialist for most care.
- Example: Anita has End-Stage Renal Disease, which is one of the conditions covered by SNPs. When Anita requires an exam, treatment or any other service or product, she is able to receive that care from a network of providers, suppliers and facilities that are specialized in treating End-Stage Renal Disease.
- Advantage: A Special Needs Plan can provide the type of specialized and narrowly-focused care that is required for patients with certain health conditions.
- Disadvantage: SNPs may not be available where you live.
- What it stands for: Accountable Care Organizations
- What it is: An Medigap beneficiaries. The goal behind an ACO is to provide beneficiaries (particularly enrollees with a chronic illness) with streamlined care that avoids duplicative efforts and promotes improved communication between participating providers.
- Example: Henry is under the care of an ACO and is suffering a complication from his asthma. Henry’s team of providers communicate with one another to analyze his previous treatments, tests and his current symptoms. The team then comes up with a plan for Henry and directs him where to go.
- Advantages: ACOs can provide an improved quality of care due to the coordinated efforts of health care providers that are invested in the cause.
- Disadvantages: Some argue that ACOs don’t empower patients and don’t adequately address the problems of the fee-for-service model it is designed to fix.
Learn more about Medicare and health care by reading through the guides below.