HMOs, PPOs and Other Health Insurance Networks

Three little letters make a lot of difference to your health insurance plan. If you can tell the difference between 4 types of insurance networks, then you’ll understand how your medical care, costs, and plan type fit together.

The two main health insurance network types to know are:

  • Preferred Provider Organizations (PPOs)
  • Health Maintenance Organizations (HMOs)

An HMO is generally cheaper than a PPO, but HMOs will have fewer doctors available. There are two other common network types:

  • Point of Service (POS) and
  • Exclusive Provider Organizations (EPO).

These combine features from HMO and PPO networks.

PPO (Preferred Provider Organization) Health Plan Definition:

PPOs rarely require a referral to see medical providers.
If you have a PPO plan, you can visit any provider in your plan’s network at a discounted (“preferred”) rate.
PPO networks include independent medical providers and hospitals.
PPOs allow you to visit doctors that aren’t in your PPO network, but you’ll be responsible for more of the cost.
Your PPO may have an entirely separate deductible and out-of-pocket maximum for out-of-network medical professionals.
PPOs are generally the most flexible network type.
PPOs are generally the most expensive network type.

HMO (Health Maintenance Organization) Health Plan Definition:

To use an HMO network, you’ll choose a primary care physician (PCP) to coordinate your medical care.
Referrals from your PCP are usually required to visit a specialist.
HMOs limit you to a relatively small network of in-network doctors and hospitals.
During emergencies, your HMO will cover out-of-network care.
In-network doctors may be directly employed by your insurance company.
Some HMO networks put more limits on the number of tests or treatments than PPO networks.
HMOs are generally less expensive than other networks. There are fewer doctors to pay, and your primary care provider (PCP) has an interest in keeping you healthy.
However, it can be burdensome to contact your PCP before making healthcare decisions.
For example, if you had a skin issue, you might have to see your PCP to get referred to a dermatologist.

POS (Point of Service) Health Plan Definition:

POS networks are like HMOs, but without strict network limits.
Unlike HMOs, POS networks partially cover non-emergency care from doctors who aren’t in your plan.
POS networks ask you to get referrals from your primary care physician (PCP) before seeking care from specialists, like an HMO would.
Depending upon the plan, preventive care and other services rendered by your PCP may be heavily discounted.
POS networks are generally less expensive than PPOs and more expensive than HMOs.

EPO (Exclusive Provider Organization) Health Plan Definition:

EPO networks are like HMO networks, but without difficult referral rules.
Unlike HMOs, EPO networks do not require referrals from a primary care physician.
You’ll still be able to get non-emergency care only from specific doctors who accept your EPO.
EPOs are generally less expensive than PPOs and more expensive than HMOs.