What is the difference between an HMO, EPO and PPO?
Buying a health plan that caters to both your expectations and budget can be a little tricky. Things get all the more difficult because of the industry jargon and terminology. So, you must be aware of certain acronyms, their benefits, and their shortcomings to make a better choice and go for a health plan that addresses your concerns aptly. This article aims to explain the meaning and differences between HMO, EPO, and PPO, enabling you to make an educated choice.
Key Highlights
- You should know the difference between EPO, HMO, and PPO plans in order to make a well-informed choice.
- HMO plans are the cheapest. They require you to select a PCP, or Primary Care Physician.
- PPO plans come with a greater degree of flexibility but can feel heavy on your pocket.
Epo, PPO and HMO explained
Let’s understand the three most common health plan types.
HMO or Health Maintenance Organization, is one of the most affordable plans and operates within a relatively smaller network of healthcare providers. It requires you to opt for a Primary Care Physician (PCP). In case you require a specialist, the same PCP will refer you to one from within the HMO network. It serves as a prepaid health plan and covers healthcare services such as hospital stays, x-rays, lab tests, surgeries, etc.
EPO stands for Exclusive Provider Organization. These health plans offer a fixed set of doctors, pharmacies, labs, and hospitals. But the network is comparatively larger than the HMO networks. Insurers have to choose services from within the EPO network when they want their expenses covered. However, there are certain special cases in EPO plans where an insurer can opt for out-of-network services without paying any additional costs.
PPO or Preferred Provider Organisations are more flexible than HMO plans. Insurers enjoy a higher degree of flexibility as compared to HMO or EPO plans. They can go with specialists or opt for out-of-network services without seeking the referral of a PCP. However, this flexibility can feel heavy on your pocket as the premiums of PPO plans tend to go quite high.
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Difference between an HMO, EPO and PPO
|
Parameter |
HMO |
EPO |
PPO |
|
Average premium cost |
Lowest cost. |
Mid-range cost. |
Highest cost. |
|
Primary Care Physician (PCP) |
Required. You have to select a PCP who takes care of and coordinates all your healthcare requirements. |
Not required. You are free to see any in-network doctor or even a specialist without seeking a referral from your PCP. |
Not required. The insured is free to visit any doctor or healthcare provider, within the network or even outside. |
|
Flexibility to choose providers |
Very low. You must follow a strict healthcare path as suggested by your PCP. |
Moderate. You do not need any referrals, but you will have to choose from health care providers within the network. |
High. You are free to choose any doctor, specialist, lab, or hospital. |
|
Out-of-network coverage |
Not available |
Only available in case of certain emergencies |
Easily available |
|
Network utilisation |
You can choose from in-network healthcare providers and facilities. |
You must choose from in-network healthcare providers and facilities. But there are certain exceptions. |
It is okay to go off the network. But this will add to your overall premium. |
|
Ease of getting specialised care |
You need to seek approval from your PCP first. |
You can easily seek a specialist’s care. But they have to be from within your network. |
You can see any specialist, anytime, within or outside of the network, as per your preference. |
|
Best suited for |
Insurers who want low-cost health care and don’t have any issue seeing a PCP and seeking their referrals. |
Insurers who want a certain degree of flexibility but are okay staying within the network. |
Insurers who look for maximum flexibility and can afford to pay more for the same. |
Which plan should you go for?
Choosing the right health plan is crucial to surviving any kind of health mishap that may happen in the future. Now that you know the difference between the three, you will be in a better position to make your choice. Consider multiple factors like health expenses, degree of flexibility, and network utilization to assess your requirements better.
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