This section
will help you understand the basics of managed care plans.
Keep in mind that health insurance policies vary widely, and
the information presented here is simply a guideline. Make
sure you understand exactly what’s included in your policy
before signing the contract.
Overview of Coverage
Health
insurance policies typically cover the treatment of illness,
disease, and accidents, including doctor’s office visits,
prescriptions, diagnostics (e.g. x-rays, blood tests), hospitalization,
surgery, and emergency services. Maternity care is also covered
by most policies. Preventive care may or may not be covered
in a basic policy, depending on the type of plan.
Optional
plan provisions can often be added to the policy (additional premium required), such as
coverage for routine vision and dental care, mental health
care, or chiropractor services.
Most
policies do not cover elective cosmetic surgery, experimental
procedures, or work-related injuries covered by workers’ compensation
insurance.
An HMO
(Health Maintenance Organization) is a type of managed care
plan that typically works in the following manner:
The HMO consists of a network of “capitated” health
care providers, which means these providers receive
set monthly payments for each plan member (such as your
employees), regardless of how frequently their services
are used.
Your
employees are required to choose a Primary Care Physician
(PCP) to perform many of their health care services and
refer them to specialists when necessary. They are only
referred to specialists within the HMO’s network, except
in special circumstances.
Your
employees are only responsible for a small co-payment
(e.g. $10) for visits to their PCP or specialists to whom
they’ve been referred. In most cases, no deductible is
required.
If
your employees visit another physician without a referral
from their PCP, they won’t receive any coverage, except
in certain emergencies.
In
general, POS (Point of Service) plans have similar rules to
HMOs, though they tend to be more flexible in offering referrals
outside of the network and providing some coverage for self-referrals.
Thus, if your employees visit their Primary Care Provider
(PCP) and receive referrals to specialists when necessary,
their costs and coverage are likely to be similar to an HMO.
However, if they refer themselves to a specialist or doctor
outside of the plan’s network, they may need to pay a deductible
and coinsurance (a portion of the medical fees).
Example:
Under a POS plan, your employees may only be responsible
for a $20 co-payment if they visit their PCP or a referred
specialist inside or outside of the network. However,
they may be responsible for a deductible and 20% coinsurance
if they refer themselves to a network physician or 30%
coinsurance if they visit an out-of-network physician.
PPOs
(Preferred Provider Organizations) typically consist of a
network of providers that have agreed to provide services
to plan members at discounted rates. These are generally considered
the most flexible managed care plans because they usually
don’t require members to choose a Primary Care Physician (PCP).
This means your employees receive the same coverage for any
provider within the network, including specialists. They can
also choose a provider outside of the network and receive
coverage, though the out-of-pocket expenses will likely be
higher, as demonstrated below.
Example:
Under a PPO plan, your employees may be responsible
for 20% coinsurance (based on discounted rates) and
$150 deductible if they visit any physician within the
network, or 30% coinsurance (based on non-discounted
rates) and $300 deductible if they visit a physician
who is not in the network.
The table
below compares the three types of insurance discussed in this
section on several important and distinguishing features.
However, it should be noted that the lines between these plans
have begun to blur in recent years. For example, your provider
may offer an HMO plan with fewer restrictions, so that it
resembles a POS plan. This table is simply meant to be a guideline
of the features generally considered typical for each type
of plan.
HMO
POS
PPO
Choice
of Health Care Providers
Typically
more restrictive than other plans, with no coverage for
out-of-network providers or specialists seen without referral
from primary care physician.
Financial
incentives to use primary care physician and get referrals
to other network providers.
Financial
incentives to use network providers. Usually no primary
care physician needs to be selected
Preventive
Care
Covered at 100%.
Covered at 100%.
Covered at 100%.
Prescriptions
Typically
covered.
Typically
covered.
Sometimes
covered. Often available as coverage for a higher
premium.
Out-of-Pocket
Expenses
Typically
lower than other plans, but no coverage for out-of-network
providers or providers seen without a referral.
Mid-range.
More expensive when an out-of-network or self-referred
network provider is used.
Typically
higher than HMO or POS, but lower than traditional fee-for-service
plans. More expensive when an out-of-network provider
is used.
Premiums
Typically
lower than other plans.
Typically
higher than HMO plans.
Typically
higher than HMO or POS, but lower than traditional fee-for-service
plans.
Paperwork
Relatively
insignificant.
May
be more significant when an out-of-network or self-referred
network provider is used.
May
be more significant when an out-of-network provider is
used.
The HCI Advantage A strong benefits package helps
you recruit and retain valuable employees.
We help our clients tailor a program that
will fulfill both the employers' and employees' needs.
Please call HCI at 713-626-2838 or use our Contact Form.
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