Exclusive Provider Organizations (EPO) are networks of medical care providers which consist of Primary Care Providers (PCPs), Specialists, Hospitals and Ancillary Providers. Coverage is limited to these in-Network providers except in a true emergency.
The Primary Care Physician coordinates the treatment needs and access to Specialists (Referrals), for Surgery & Hospitalization (Pre-certification) and any Medical Tests (Pre-authorization).
An EPO plan is generally the least expensive approach as the patient has the lowest level of freedom with provider care selection.
Point-of-Service (POS) plans include an EPO for in-network coverage but also allow insured to go out-of-network and visit the provider of their choice. The out-of-pocket cost while using an in-network provider through the EPO will be much lower than using an out-of-network provider as all services and providers have agreed to reduced fees.
Out-of-network services are typically reimbursed at a specific coinsurance level (typically 70% to 80%) after satisfying a deductible. Maximum allowable charges for out-of-network services are limited to a specific percentile of “reasonable & customary” charges or as a percentage of medicare allowable charges (e.g. 150% of Medicare).
Preferred Provider Organization (PPO) plan consists of a network of health care providers than an insured member has complete access to without referrals. PPO networks are typically significantly larger than EPO networks and provides insureds with a much greater choice of providers. An insured member also has access to providers outside the PPO network.
Health Saving Account (HSA) compatible medical plans entered the market as a different means of controlling employer medical insurance costs. These are called High Deductible Health plans or Consumer Driven Healthcare plans. CDH plans have a “high deductible” that the member must meet before the insurance coverage “kicks into play”. Office visits, prescriptions, hospitalization, etc. all go towards the deductible first. After the deductible is met then the plan behaves like a traditional medical program. Typical copays for office visits and prescriptions take effect after the deductible has been satisfied. The exception to this is preventive care which under Health Care Reform is covered at 100% immediately.
Tied to the CDH medical plan is a Health Savings Account (HSA). The HSA is the employees personal account and any funds in the account always belong to the employee regardless of whether the account was funded by the employee or the employer. The employee uses the funds from the HSA to pay for any out-of-pocket expenses such as deductible, copays, coinsurance and the lengthy list of items and services allowed under a Flexible Spending Account (FSA).
When designed properly, CDH plans encourage employees into making more cost efficient care decisions. CDH plans require proper planning and implementation. Employee education is a critical component to the success of your business.
Most medical plans are written on a fully insured basis whereby employers are “pooled” together with other companies of similar size in the same regional area. Rate increases are geared towards the overall claim experience of that pool of employers. Employers with healthy employees and low claim usage will offset costs for other pool employers with severe medical costs. An alternative to this approach is self-insurance or an Administrative Services Only (ASO) contract.
ASO contracts allow companies to save money in years when they have lower than expected claims. Conversely, in bad years they are protected by stop loss insurance if claims exceed expected levels.
The key elements of an ASO plan are: