Navigating Health Plan Options
Do you know the difference between a POS and a PPO? They aren't airport codes or lines on an eye chart -- they're actually types of healthcare plans. Modern healthcare follows its own rules and speaks its own language. With a little preparation, you'll be ready to navigate the healthcare maze and find a plan that's right for you.
What are the different kinds of healthcare plans?
Here's a rundown of the most common types of plans:
- Fee-for-service (also called an indemnity plan): This is the traditional way to pay for healthcare. You see a doctor of your choice and pay his or her fees, either with or without the help of insurance.
- Managed care: There are several types of managed care plans, including HMOs, PPOs, and POS's (see below). When you enroll in a managed care plan, you or your employer pays a set monthly fee. The fee may cover everything, but you usually have to pay an additional copayment (usually between $5 and $25, and sometimes more) for doctor's visits, prescription drugs, or emergency room visits. (Hospital stays are usually fully covered.) Managed care plans work with a specific group of doctors and hospitals. Depending on your plan, you may have to pay a little more -- or a lot more -- to see a doctor or get care at a hospital outside of the network.
- HMO (Health Maintenance Organization): HMOs are the oldest form of managed care. Like other managed care plans, an HMO provides a network of doctors and hospitals. A primary care physician coordinates your care and refers you to specialists within the network. The hallmark of an HMO is that this health care model will generally not cover a visit with a doctor or hospital outside the network. Most HMOs cover the cost of preventive care, something that PPOs and POS's often do not cover.
- PPO (Preferred Provider Organization): If you belong to a PPO, you will have to pay, in addition to your monthly fee, a small copayment for services such as seeing a doctor or filling a prescription. Unlike an HMO, this plan gives you the option of seeing a specialist without having to be referred by a primary care physician, and you can also see doctors who are not signed up with the plan without a referral. However, if you choose a doctor outside the network, the copayments will be substantially higher, and you'll have to pay a deductible as well.
- POS (Point of Service): This is another plan that offers the flexibility of a PPO, but still has a network of doctors like a traditional HMO. A primary care physician coordinates your care, but if he or she refers you to a specialist outside of the network, the plan will still cover some of your costs. However, if you seek an outside doctor on your own, you'll have to pay a fair bit extra.
How do I know what kind of plan is right for me?
In the end, the name of a plan isn't necessarily as important as its quality. Instead of getting hung up on labels, think about what kind of services you really want and then find a plan that fits your needs. Some offer great mental health coverage. Others make it really hard to see a counselor. Some offer lower deductibles, or better services for chronic illnesses.
The Agency for Healthcare Research and Quality recommends considering the following aspects:
- Compare costs. The cost of a health plan should meet your budget, and it may be the most important feature of all. Shop around.
- Find out whether the plan includes your preferred doctors and hospital. If you already have a good relationship with a doctor, try to find a plan that won't get in the way.
- Be aware of the cost of a catastrophic accident or chronic illness. Some plans offer a lot of flexibility, but pay only 80 percent of hospital bills. That's fine for a short stay in the hospital, but if a family member were left paralyzed from an auto accident, you may have to pay $6,000 or more in out-of-pocket expenses before your insurance coverage kicks in. Also, check whether your plan requires you to notify your doctor or insurance company within 48 hours of an accident: If so, be sure your family members know to do so in case someone is incapacitated. Failing to notify your doctor may cause problems with your coverage.
- Comparison-shop for the benefits you need. You may be especially interested in a plan that offers partial payment of fertility treatments, for instance. Read the fine print.
- Check for high ratings from customers. People who enroll in healthcare plans often have the opportunity to rank the quality of their care by answering survey questions. Two especially thorough and reliable surveys are the Consumer Assessment of Healthcare Providers and Systems (CAHPS) and the Healthcare Effectiveness Data and Information Set (HEDIS). You can find out if a particular health plan has a CAHPS or HEDIS report by checking with your employer, the Medicare or Medicaid office, or the health plan itself.
- Look for a commitment to helping people get better and stay well. In addition to rankings from customers, the HEDIS rates health plans on their commitment to wellness and preventive care. For example, a plan that stressed smoking cessation and timely childhood immunizations would be rated higher than plans that didn't.
- Accreditation. Many healthcare plans seek a seal of approval from the National Committee for Quality Assurance. A plan has to meet more than 50 requirements to earn accreditation. HMO and POS plans that far exceed the standards receive a rating of "excellent." The top rating for PPO's is "full" care. If accreditation has been denied, you'll probably want to look elsewhere.
Agency for Healthcare Research and Quality. Choosing and Using a Health Plan.
National Committee for Quality Assurance. Definitions: Insurance terms.