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The
information below is from a report by the Agency for Healthcare Research
and Quality, a division of DHHS.
www.ahrq.gov
The Agency for Healthcare Research and Quality Web
site provides practical health care information, research findings, and
data to help consumers, health providers, health insurers, researchers,
and policymakers make informed decisions about health care issues. Their
web site does not endorse any commercial web site, and the information
below is for educational purposes only.
What Are My Health Plan Choices?
Choosing between health plans is not as easy as
it once was. Although there is no one "best" plan, there are some plans
that will be better than others for you and your family's health needs.
Plans differ, both in how much you have to pay and how easy it is to get
the services you need. Although no plan will pay for all the costs
associated with your medical care, some plans will cover more than
others.
Indemnity and managed care plans differ in their
basic approach. Put broadly, the major differences concern choice of
providers, out-of-pocket costs for covered services, and how bills are
paid. Usually, indemnity plans offer more choice of doctors (including
specialists, such as cardiologists and surgeons), hospitals, and other
health care providers than managed care plans. Indemnity plans pay their
share of the costs of a service only after they receive a bill.
Managed care plans have agreements with certain
doctors, hospitals, and health care providers to give a range of
services to plan members at reduced cost. In general, you will have less
paperwork and lower out-of-pocket costs if you select a managed care
type plan and a broader choice of health care providers if you select an
indemnity-type plan.
Indemnity Plan
With an indemnity plan
(sometimes called fee-for-service), you can use any medical provider
(such as a doctor and hospital). You or they send the bill to the
insurance company, which pays part of it. Usually, you have a
deductible—such as $200—to pay each year before the insurer starts
paying.
Once you meet the deductible, most indemnity plans pay a percentage of
what they consider the "Usual and Customary" charge for covered
services. The insurer generally pays 80 percent of the Usual and
Customary costs and you pay the other 20 percent, which is known as
coinsurance. If the provider charges more than the Usual and Customary
rates, you will have to pay both the coinsurance and the difference.
The plan will pay for charges for medical tests and prescriptions as
well as from doctors and hospitals. It may not pay for some preventive
care, like checkups.
Managed Care
Preferred Provider Organization (PPO). A PPO is a form of managed
care closest to an indemnity plan. A PPO has arrangements with doctors,
hospitals, and other providers of care who have agreed to accept lower
fees from the insurer for their services. As a result, your cost sharing
should be lower than if you go outside the network. In addition to the
PPO doctors making referrals, plan members can refer themselves to other
doctors, including ones outside the plan.
If you go to a doctor within the PPO network, you will pay a copayment
(a set amount you pay for certain services—say $10 for a doctor or $5
for a prescription). Your coinsurance will be based on lower charges for
PPO members.
If you choose to go outside the network, you will have to meet the
deductible and pay coinsurance based on higher charges. In addition, you
may have to pay the difference between what the provider charges and
what the plan will pay.
Health Maintenance Organization (HMO). HMOs are the oldest form
of managed care plan. HMOs offer members a range of health benefits,
including preventive care, for a set monthly fee. There are many kinds
of HMOs. If doctors are employees of the health plan and you visit them
at central medical offices or clinics, it is a staff or group model HMO.
Other HMOs contract with physician groups or individual doctors who have
private offices. These are called individual practice associations
(IPAs) or networks.
HMOs will give you a list of doctors from which to choose a primary
care doctor. This doctor coordinates your care, which means that
generally you must contact him or her to be referred to a specialist.
With some HMOs, you will pay nothing when you visit doctors. With other
HMOs there may be a copayment, like $5 or $10, for various services.
If you belong to an HMO, the plan only covers the cost of charges for
doctors in that HMO. If you go outside the HMO, you will pay the bill.
This is not the case with point-of-service plans.
Point-of-Service (POS) Plan. Many HMOs offer an indemnity-type
option known as a POS plan. The primary care doctors in a POS plan
usually make referrals to other providers in the plan. But in a POS
plan, members can refer themselves outside the plan and still get some
coverage.
If the doctor makes a referral out of the network, the plan pays all or
most of the bill. If you refer yourself to a provider outside the
network and the service is covered by the plan, you will have to pay
coinsurance.
Your primary care doctor will serve as your regular doctor, managing
your care and working with you to make most of the medical decisions
about your care as a patient. In many plans, care by specialists is only
paid for if your are referred by your primary care doctor.
An HMO or a POS plan will provide you with a list of doctors from which
you will choose your primary care doctor (usually a family physician,
internists, obstetrician-gynecologist, or pedicatrician). This could
mean you might have to choose a new primary care doctor if your current
one does not belong to the plan.
PPOs allow members to use primary care doctors outside the PPO network
(at a higher cost). Indemnity plans allow any doctor to be used.
Courtesy: The Agency for Healthcare Research and Quality Web site
provides practical health care information, research findings, and data
to help consumers, health providers, health insurers, researchers, and
policymakers make informed decisions about health care issues.
Source:
Agency For Health Care Research and Quality
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