Group health care plans provide comprehensive health services to their members. The driving force behind group plans is that the insured is given financial incentives to use the medical providers who belong to the plan. The two most common types of plans are health maintenance organizations (HMOs) and preferred provider organizations (PPOs).
HMO:
HMOs are the oldest form of managed care plan. In an HMO, instead of paying for each service that you receive separately, your coverage is paid in advance. This is called prepaid care. For a set monthly fee, HMOs offer members a range of health benefits, usually including preventive care. HMOs will give you a list of doctors from which you must choose a primary care physician, known as your PCP.
This doctor coordinates your care, which means that generally you must contact your PCP to have any care authorized or be referred to any specialist. This is often called physician-directed care, as self-referrals to specialists or unauthorized care is not covered.
Typically, with most HMOs there is a copayment for office visits, hospitalizations, and other health services.
PPO:
A PPO is a form of managed care where the insurance company has negotiated discounts with doctors, hospitals, and other care providers who have agreed to accept lower fees from the insurer for their services as a trade-off for receiving a large volume of patients. If you go to a doctor within the PPO plan or network, you will pay a copayment and not owe any additional money. In addition, your coinsurance obligation will be based on the negotiated and discounted charges for PPO members.
For example, the insurer may reimburse you for 90 percent of the cost if you go to a provider within the network, but if you choose to go to a provider out of network, the insurer might only reimburse you for 70 percent of the cost. In addition, with an out-of -network provider, you may have to pay the difference between what the provide normally charges and what the plan will recognize as a reasonable charge.
The primary advantage of PPOs is the ability to have more personal control over your health care, including the ability to make self-referrals to specialists. In essence, plan members can refer themselves to doctors of their choice, including specialists inside and outside the PPO network.
