Running head: HEALTH FINANCE
The Power of HMO, PPO, and EPO in Healthcare Decision-Making
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Health Finance
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Abstract
In the United States various entities operate and one corresponds among all these types of
organizations is that they are developed in an endeavor to amend the healthcare organization's
delivery system (Harris & Gordon, 2008). This article discusses the history of health plans and
insurance, differences, and the benefits of HMO, PPO, and EPO, and lastly which is the most
preferred healthcare plan.
Health Finance
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History of Health plan and insurance
Until lately it was possible, and certainly practical, to make a difference between
insurance (e.g. compensation or service benefits coverage) and managed care as many ways to
aid health care (Harris & Gordon, 2008). Health insurance in the United States has emerged quite
recently. Before world war II the medical and health insurance was accessible on a restricted
scale. Earlier most of the people until the 1930s bought and paid for the medical and health
insurance with their own expense that it out of pocket. Eventually the great depression of 1930,
led hospitals and healthcare organizations to start with some insurance plans. Ultimately over the
passage of years there were many modifications and changes that occurred and by 1990’s
“managed care” became the supreme authority in the industry of healthcare (Harris & Gordon,
2008).
Introduction to PPO, HMO, EPO
Currently there are various medical insurance providers and each provider has a different
insurance plan. A few of the plans are PPO, HMO, EPO. These plans have their own factors of
consideration and have different strengths and weaknesses to it. One striking factor difference is
the cost and benefit offered by these plans (Suh, 2019). The following chart shows some
differences:
Features
Out of Network
Requirement of
primary care
physician
Pre-authorization
criteria
Cost of premium
Specialist visit
PPO
Not Covered
Not necessary
HMO
Covered at the cost
Yes
EPO
Not Covered
Mostly
No
No
Mostly yes
Very High
Referral not required
Low
Referral required
Average
Referral not required.
Health Finance
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PPO:
PPO stands for Preferred Provider Organization. This plan is one of the most standard
plans and is most common among other health plans. This plan is very flexible in seeing a
specialist. No primary care doctor's referral or recommendation is required to see a specialist. It
covers the out of network provider and it covers it differently with the in-network provider. For
instance, if you see a cardiologist you do not need a referral from the primary care physician and
if the cardiologist does not follow your insurance, the full amount has to be paid to a
cardiologist, and later the claim has to be filed to the insurance company for coverage. The
coverage will happen with terms and conditions mentioned but the PPO plan will try to cover the
out of network specialist (Suh, 2019). The only downfall of PPO is that it has higher premiums
and deductibles (Masterson, 2020).
HMO:
HMO stands for Health Maintenance organizations. This plan does not allow to see out of
network specialist unless recommended by a primary healthcare physician. The cost of
consulting a doctor or specialist which is not in the network will not be covered by the company
(Suh, 2019). HMO has very low premiums unlike PPO and also has lower costs than PPO, but
the only con of HMO is that it requires to be in the network (Masterson, 2020).
EPO:
EPO stands for Exclusive provider organization. This healthcare plan is less common
than PPO’s and HMO’s, but it has factors and features of both the plans combined. In EPO, you
can bypass the primary physician and go to see a specialist like PPO, but the out of network
Health Finance
provider is not covered in EPO like HMO unless there is an emergency (Suh, 2019). The con of
EPO is that it has a limited network unlike PPO’s and HMO’s (Masterson, 2020).
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Conclusion
Thus, looking and analyzing all the factors I would prefer PPO networks because it gives
the flexibility of seeing out of network providers as well as an in-network provider without a
hassle. Though the cost of premium and deducible is very high but can be ignored because of the
quality of benefits the plan provides.
Health Finance
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References
1. Harris, Karen K, and Deborah Gordon. “MANAGED CARE ORGANIZATIONS AND
OTHER HEALTH INSURANCE MATTERS.” Seyfarth.com, Illinois Jr, 2008,
www.seyfarth.com/dir_docs/news_item/e761137d-7e73-4a50-ae905b76ea3d8a38_documentupload.pdf.
2. Suh, Elissa. “What Are the Differences Between an HMO, PPO, EPO, and POS Plan?”
Policygenius, 2019, www.policygenius.com/health-insurance/hmo-ppo-epo-pos-difference/.
3. Masterson, Les. “HMO vs PPO vs Other Plans:What's the Difference?” Insurance.com,
Https://Www.insurance.com/, 27 Feb. 2020, www.insurance.com/health-insurance/differencebetween-ppo-hmo-hdhp-pos-epo.html.