Choosing a Managed Care Plan That is Right for You

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Managed care plans are the most common type of individual coverage available in Texas. To help you choose a plan that works for you, this article compares three common types of managed care plans: Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), and Exclusive Provider Organizations (EPOs). To contain costs, these plans contract with physicians, hospitals, and other health care providers to create the health plan’s network. These plans vary in many ways, including how they structure cost sharing and whether they offer out-of-network benefits or require referrals.

 

Health Maintenance Organizations (HMOs)

• Closed Network: You must use in-network doctors, hospitals, and other providers.

• Referrals Required: You must choose a primary care physician (PCP) from the HMO’s network and receive a referral before using other doctors in the network.

• Limited Out-of-Network Benefits: Except in specific circumstances (such as an emergency), an HMO will not cover services provided by out-of-network providers.

• Cost Sharing: You pay designated copays for covered services. Some plans require you to meet a deductible before they start paying for services. Typically, HMOs do not require you to pay coinsurance, which can make it easier for you to estimate your annual health care expenditures.

 

Preferred Provider Organizations (PPOs)

• Open Network: You may use in-network and out-of-network doctors, hospitals, and other providers.

• Referrals Usually Not Required: Most PPOs permit you to visit any doctor in the network without a referral.

• Out-of-Network Benefits: PPOs provide benefits when you see an out-of-network provider. However, you will be responsible for an out-of-network deductible, a higher coinsurance rate, and any remaining balance charged by the healthcare provider.

• Cost Sharing: When you access the PPO’s network, you may pay a copay or coinsurance for covered services. Some plans require you to meet a deductible before they start paying for services.

 

Exclusive Provider Organizations (EPOs)

• Closed Network: You must use in-network doctors, hospitals, and other providers.

• Referrals Sometimes Required: Some EPOs permit you to see any doctor in the network without a referral, others require a referral. Verify referral requirements with the EPO before making an appointment.

• Limited Out-of-Network Benefits: Except in specific circumstances (such as an emergency), an EPO will not cover services provided by out-of-network providers.

• Cost Sharing: When you access the EPO’s network, you may pay a copay or coinsurance for covered services. Many plans require you to meet a deductible before they start paying for services.

 

I joined OPIC as a staff attorney in 2011.  I specialize in life, health, and disability insurance law.  I know that consumers can find themselves frustrated with these insurance issues at very difficult times in their lives—during sickness, after an injury, and after the loss of a loved one.  I am grateful that I can utilize my expertise to educate and empower insurance consumers as they navigate these challenges.