A managed care health insurance plan is a system that manages the delivery and financing of services for the members that are enrolled in one of the variety of plans available through the managed care organization. There are three main types of managed care health plans available; HMO (Health Management Organization), PPO (Preferred Provider Option), and POS (Point-of-Service). The main purpose of managed care health plan is to control the cost of health care. It does this by providing high-quality care through controlled measure and attempts to provide only medically necessary services.
Health Management Organization
An HMO enters a contractual agreement with doctors, hospitals, and other ancillary services to create an approved network of providers. In the contract the HMO agrees to pay a predetermined fee to the providers for the various services. Members of this type of insurance plan, anyone who purchases this plan, must select a primary care provider from the list of pre-approved doctors. Likewise, you must go to a hospital that is within the approved provider list.
If you see a doctor or visit a hospital that is not on the list, you will be responsible for the cost of any medical treatment you receive. You will also be required to notify your primary care doctor if you need to go to the emergency room or if you need to be hospitalized. If you need to see a specialist or require a second opinion, you need to get a referral before you can see the other physician or it won’t be covered.
Preferred Provider Option
The PPO works much like an HMO but your have greater flexibility. You still have to choose a PCP (Primary Care Physician) but you do not need to get a referral to see other doctors within the network. You might pay a greater co-pay and have a deductible. In general, a PPO is more expensive than an HMO.
A POS health care plan is an HMO/PPO hybrid plan. There is still a network of physician to choose from but you can choose which option, HMO or PPO, you want to use when you see you particular physician. If you want to see a particular physician that is not your PCP, then you could use the PPO portion of you plan. If you are just seeing your PCP then you can use your HMO.