Can someone explain the difference between the PPO, POS & HMO?


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  • PPOs are comprehensive networks of healthcare providers that are set up by employers, by insurers, and by major providers, such as hospitals and groups of doctors. The PPO sponsor negotiates for reduced fees for services contracted through the PPO. Under a PPO plan, the patient also has the choice of seeing nonparticipating doctors, but those doctors' services may not be fully covered.

     HMOs offer comprehensive health care for a prepaid fee instead of reimbursing the provider on a fee-for-service basis, thereby shifting the risk of unexpected costs to the provider.Staff model HMOs provide services at one or more locations solely to members through professionals who are full- or part-time employees of the HMO. Individual practice associations (IPA) deliver services through a group of professionals who incorporate to care for HMO members. IPAs offer a wider choice of available physicians and, sometimes, more convenient locations. Group model HMOs deliver services through physicians' groups and local hospitals that the HMO contracts with to provide health services to members at designated health centers.

    A POS or Point of Service plan is kind of like an HMO and PPO combined type health care plan. You have more flexibility than a regular HMO, but pay a smaller fee and deducible than a PPO.

  • HRDir gave good descriptions.  I can add a few things.  From an employee perspective HMOs are very restrictive.  Generally they have to go to their primary care provider first and can not see a specialist without a referral.  They also generally have lower co-pays and no deductible (or low deductibles).  HMOs used to be THE plan - low cost to both employee and employer.  For the past few years though, the costs for HMO have run neck and neck with many PPOs and POS plans.  One of the few HMO plans that have remained relatively inexpensive when compared to PPO and POS plans is the Kaiser plan.  But their model is different than most insurers in that they own their own facilities - so the doc, pharmacy, everything is one building.  Downside is you have limited choice.  And if you see a doc you like, you don't necessarily get the option to see him again, you get whoever is there that day.
  • I'll put my two cents in - in the POS (Point of Service) plan employees have to designate a physician as their Primary Care Provider (PCP) and they will only be able to see that doctor.  Any other specialist or hospital would have to come as a referral from your PCP. Therefore, it limits employees' options (e.g., getting a second opinion).  And this is exactly what makes POS plans a little cheaper than PPO - the insurance carrier has a limited number of providers to negotiate with.
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