What is the
difference between HMO
and PPO?
HMO...PPO...EPO??? What does it all mean. Well... rather than give you the long version of each term, let's get to the heart of what each is, and more importantly, how it affects your
employees.
First a stroll down medical memory lane. Up until the mid 80's (wow...last century),
California Group health insurance was pretty straight forward. You can go to any doctor and the insurance company is going to pay a certain amount. It was around this time however, that they came up with "managed care". And voila, terms like HMO, PPO, and EPO made their entrance. Well what are they?
They are essentially volume discounts.
In order to control costs, the insurance company went to doctors and said, "Look. If you join our PPO, we'll bring you a lot of customers (us the insured) but we want you to discount your costs 30-60%. That $100 doctor visit should be $60. And if you join our HMO, we'll pay you $50/month for each person who signs up with you. In turn, there will be a lot of people to make up for this discounted amount.
Now there are variations in a contract between insurance companies and doctors, but essentially, they are offering volume discounts to help contain medical cost inflation...and it worked!! From the early 90's to about 1997...all was relatively calm on the insurance premium front. We may have reached the extent of what managed care can do as premiums have risen significantly since 1998.
Now that we have a behind-the-scenes view of what HMO, PPO, and EPO are from a doctor point of view...how do they affect us??
First let's break each one down. If the old way (Fee for Service) was that you can go to any doctor you wish, then the
HMO (Health Maintenance Organization) is the polar opposite. You choose
one doctor up front, and essentially all care is managed through that doctor and with a local hospital and medical group. This doctor is referred to as a Primary Care Physician and he or she makes most decisions on care and/or referral to quotes. The trade-off with this highly structured system is that the benefits are very rich...i.e. low out-of-pocket expense when you get sick or hurt. Some people swear by it...others swear at it. It works for people who are flexible and want low-out-of-pocket expense. You typically do not find HMO's available in rural areas...because remember, they need lots of people to make it work.
Back to our spectrum, the
PPO's (Preferred Provider Organization) are somewhere in between the "go to
any doctor" method of the past and HMO's "choose
one doctor/hospital". There is an extensive list of doctors and hospitals in California from which you can go to. You refer yourself out to quotes and you are not locked into one area or one doctor. You receive the negotiated rates (30-60% discounts mentioned above) with a PPO plan which can amount to significant savings. That being said, you will help pay along the way...either in the form of a percentage or a deductible (we'll get into these in section 4). Now with PPO's, you can go to doctors who are not in the network but then your benefits are significantly reduced. Why?? These doctors are not offering the "volume discount" we mentioned above.
Another variation not as often seen is an
EPO (Exclusive Provider Organization). An EPO has the exact same doctors/hospitals as the PPO list but with no out-of-network benefits. If you go to a doctor not listed on the EPO list, you have
no benefits.
Some more interesting facts for
California Group health insurance networks:
In a true emergency (and be very conservative on this definition...it better be serious!!), your benefits will likely cover you even out of the above networks. Sometimes doctors participate in HMO and PPO...sometimes just one of them. You can verify your doctor's participation
here under "provider".
This HMO or PPO question is really the big one to answer for your employees first if possible. Ideally, you offer something like Blue Cross of California "Employee Elect" which allows a full range of HMO and PPO plans.
You can always ask us to explain further the differences between the two.
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Where
can I look up my doctor?
Click the link below to
look up your doctor:
CALIFORNIA INSURANCE
DOCTOR DIRECTORY
Sometimes, it is just
easier to call your
doctor's office and ask
them if they participate
in a given carrier's
network. For
example, "Do you
participate in Blue
Cross's PPO network".
Make sure to specify PPO
or HMO as some doctors
will participate in one
but not the other.
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Which carriers have the
best networks in
California?
The carrier with the
best network is one that
has your doctors.
That being said, there
are some difference
between the carriers.
We will list out the
major carriers here:
Carrier by
Carrier in
descending
order
(according
to
Plan
Satisfaction
Criteria)
Blue
Cross of
California
Blue
Cross is
owned by
Wellpoint,
which is
probably the
dominant
carrier
nationwide
in terms of
stability
and
progressive
plan design.
They are
known as
Anthem Blue
Cross Blue
Shield or
Unicare in
most other
States.
They have
been the
ones to beat
in the
California
health
market.
Network
- For PPO plans, they probably the most extensive
network with
providers in
all counties.
Over 70K
providers
and 400
hospitals State-wide plus access to the Blue Card network for
employees in
other
States.
Blue
Shield of
California
Blue
Shield of
California a
strong
carrier in
California
and also
participates
in the Blue
Card network
for
out-of-State
employees.
It is one of
the few
non-profits.
Cross and
Shield are
two
separate,
completely
independent
carriers at
the Small
Group level
(2-50
employees).
If PPO needs
to be an
option or
employees
are out of
State, they
are a good
comparison
for Cross
and Health
Net. Network
- For PPO plans, they probably rival Blue Cross
with
providers in
all
counties. They
probably do
negotiate as
well as Blue
Cross but may have a better reception from doctors/hospitals
because of
it.
This also
affects
their
pricing
going
forward.
They do allow access to the Blue Card network for
employees in
other
States.
Their HMO is comparable
to Cross.
Health
Net of
California
Health
Net of
California
was
originally
Blue Cross'
HMO many
years ago.
Traditionally,
they were a
strong HMO
carrier but
they have
aggressively
moved into
the PPO
market as
the future
of HMO's and
its cost
structure
dimmed.
They tend to
copy Cross'
moves in the
market so at
least they
are smart
enough to
the follow
the leader.
If a
company's
main focus
is HMO and
they do not
have
employees
out of
State,
Health Net
is
definitely
to be
considered.
Network
- Health Net has a strong HMO network as that has
been their
bread and
butter long
before the PPO came
along for
them.
The PPO
network
should be
well
represented throughout
the State
although
it's range
probably
does not
match Cross
or Shields,
whose experience
in the PPO
market goes
back
decades.
Kaiser of
California
Kaiser
of
California
is a very
large
carrier in
California
and it is
structured
quite
differently
than the
other
carriers.
Kaiser does
not contract
with
independent
medical
groups and
hospitals
but actually
owns its own
hospital and
employs its
own doctors.
Kaiser is by
definition
an HMO in
that you
must remain
in their
network to
be covered.
They have
recently
offered a
PPO plan but
their strong
suit is HMO.
Network - Again, for HMO, they have many facilities
(although
not in all
areas) but
tend to work
best in more
populated
areas around
cities and
larger
metropolitans.
You are
unlikely to
find a
facility in
more rural
areas and
out of State
can be
difficult.
Keep in mind
that if your
employees
are
currently
not in
Kaiser, they
will not be
able to keep
their
current doctors.
You're
either part
of Kaiser or
not.
Some people
love Kaiser
while other
do not (to put it
mildly). We have
listed Blue
Cross of
Calfornia,
Blue Shield
of
California,
Health Net
of
California,
and Kaiser
separately
as they
really are
the
strongest
carriers.
There are
many other
options on
the market,
but from our
experience,
they usually
are
advisable
against one
of the above
mentioned
four.
Pacificare
is a strong
carrier but
they were
recently
purchased by
United.
Until this
transition
runs its
course, we
are hesitant
to recommend
them.
They are
traditionally
a strong HMO
carrier with
only recent
PPO plan
options.
Their
pricing
tends to be
expensive
for PPO's
and
comparable
to Health
Net.
Aetna
tends to be
too
expensive
and its
networks are
not as good
as the above
carriers.
They went
the other
direction
when other
carrier
decided to
compete
regionally
and tried to
offer a
truly
nationalized
plan.
The problem
is that they
are not as
competitive
in terms of
network,
plan
offering,
ease of use,
and
ultimately
because of
this...not
as price
competitive.
Cigna
also falls
in this
category of
"Nationwide
plan that's
not at
competitive
in any one
region".
United,
although a
very well
run
nationwide
company
(comparable
to Wellpoint),
also offers
a separate
suite of
group plans
in addition
to its
recent
Pacificare
aquisition.
Again, until
the dust
settles on
that
acquisition
and their
networks and
pricing both
stabilize,
we would
recommend
one of the
top four
carriers.
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What
if my doctor is not in
the network?
iYou
want to make sure you
are looking at correct
type of plan (i.e. HMO
vs PPO). I would
also call the doctor's
office if they do not
show in the online
directory as some
doctors bill and are
listed under medical
groups.
For a PPO plan, if you
stay with the same
doctor, you will pay
significantly higher
amounts out of pocket
when seeing that doctor
except for a true
emergency. For
this reason, it's best
to go with a doctor that
is on the plan.
Always check with
doctors and facilities
to make sure they are
in-network. This
helps you avoid
unexpected out of pocket
expenses.
For HMO's, you will need
to choose a doctor that
participates as there
are no benefits outside
of your chosen medical
group and/or primary
care physician.
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Can I change
doctors
later?
With a
PPO plan,
you do not
need to use
a Primary
Care
Physician
(HMO plan
gate-keeper)
so you can
change
around at
any time.
Just make
sure any new
providers
also
participate
in the
network.
With an HMO
plan, you
can request
a change of
your Primary
Care
Physician if
you are not
in a course
of
treatment.
The change
will occur
the 1st of
the month
following
approval.
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Do
I need to choose a
doctor before enrolling?
With a PPO plan,
you do not need to
choose a Primary Care
Physician (HMO plan
gate-keeper) and so no
doctor code is needed
for the application or
enrollment. You
refer yourself out and
your only concern is
that any prospective
providers participate in
the PPO network.
With an HMO plan, you
will need to choose a
Primary Care Physician
and/or medical group
before enrolling.
Their code will be
entered on your
application at the time
of applying for
coverage. You can
find the code through
our online
CALIFORNIA INSURANCE
DOCTOR DIRECTORY.
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What about out-of-State
employees?
If you have
out-of-State employees,
HMO plans will not be
available to them.
We would strongly
recommend Blue Cross of
California or Blue
Shield of California in
this situation as they
are the only carriers
with a truly nationwide
(PPO) network.
They both participate in
the
Blue Card program
which extends benefits
to any BCBS carrier in
other states. In
most states, BCBS is the
dominant (if not only)
carrier of importance.
With Cross' Employee
Elect, you can offer the
full range of HMO/PPO
plans to employees in
California and offer
PPO's to out of State
employees.
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