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Health Care Reform:

Health Insurance & Affordable Care Act

HMO, PPO, EPO: What Health Plan Is Best?

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Then there are EPOs. “People have no idea what an EPO is,” says Jerry Flanagan, lead staff attorney at Consumer Watchdog, an advocacy organization that recently filed a class action lawsuit against Anthem Blue Cross in California. They claim, among other things, that the insurer enrolled people in EPO plans with no out-of-network coverage who believed they were being enrolled in PPO plans that provided such coverage.

“Materials at the time of enrollment and in member’s Explanation of Benefits have clearly stated that the plan was an EPO plan which may not have out-of-network benefits,” said Darrel Ng, a spokesperson for Anthem Blue Cross, in a statement. 

This year, HMOs and PPOs dominated the plans offered by insurers on the health insurance exchanges. According to an analysis of plans sold in the 36 states for which the federal government runs the online insurance marketplace as well as the plans sold on the California exchange, HMO offerings made up 40 percent and PPOs another 40 percent. POS plans made up 12 percent and EPO plans 7 percent. 

Pearson says the explanation may be that insurers anticipated that people who bought a PPO would probably want to use out-of-network providers. Since out-of-network spending doesn’t count toward the out-of-pocket maximum that people are responsible for before insurance picks up the full tab, these people were likely to be cheaper to insure, she says. (Next year, the out-of-pocket maximum will be $6,600 for single coverage and $13,200 for a family plan.)

Based on the 18 states that have released their proposed products and rates for next year, it doesn’t appear that plan types are likely to change significantly, says Shubham Singhal, leader of the health care practice at management consultant McKinsey & Co.

“Perhaps a few more EPOs will emerge,” he says. “Some of the health plans that might have introduced metal-level plans through the HMO are viewing the EPO as way to introduce a non-gatekeeper product.”

Since you can’t rely on plan type to provide clear guidance on out-of-network coverage, there are three basic questions to investigate when evaluating a plan, says Pearson:

  • Is there out-of-network coverage?
  • Does that out-of-network spending accrue toward the member’s out-of-pocket maximum? Legally it doesn’t have to, but some plans include it.
  • Do members need a primary care physician gatekeeper?

Fri, Aug 15 2014

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