Health Maintenance Organizations
(HMO's): HMO's are
organized systems for providing health care in a
specific area. They follow a basic and supplemental
preventative and treatment services; members generally
select a primary care physician who is responsible
for making all referrals to specialists. HMO's offer
no "out of network" benefits and have
low out-of-pocket (co-pay) expenses.
Indemnity
Plans: Indemnity or traditional insurance
is not considered "managed care". In indemnity
plans the member chooses his or her own providers.
Oversight of care by the health plan is minimal.
The member's out-of-pocket payment is generally
a percentage of the providers "usual and customary"
fee schedule.
Managed
Care: A program designed to manage the
cost and quality of health care. Ideally, managed
care brings about a comprehensive health care system
where patients receive the care they need, including
preventative care when they need it. The plans vary
from restrictive provider panels and low out of
pocket amounts to fairly open provider panels and
high out of pocket amounts.
Medicare:
The federal health insurance program for older Americans
and eligible disabled individuals. Medicare HMO's
are being offered in some areas of the country,
including California.
Point
of Service (POS): POS plans build on the
HMO concept. However, if a member chooses to seek
a specialist directly, without a referral from their
PCP, or seeks an "out-of-network" provider,
they will have coverage with a higher out-of-pocket
(co-insurance) amount.
Preferred
Provider Organization (PPO): PPO's generally
provide "in-network" and "out-of-network"
benefits and do not require a PCP referral to see
a specialist. The amount the member must pay out
of pocket is less when using an "in-network"
provider.
Co-payment:
A flat fee paid out of pocket for medical services,
at the time the service is rendered. Usually applies
to physician office visits, prescriptions, emergency
or hospital services.
Co-insurance:
Coinsurance, like co-payments, is a common form
of member cost-sharing, typically applied as percentage
of applicable costs after the deductible requirements
are met. With traditional non-managed care plans,
the percentage is based upon provider charges, sometimes
up to a maximum allowable amount per service. In
managed care plans, the percentage can be based
upon provider contract rates.
Deductible:
The amount of medical expense a person must pay
each year from his/her own pocket before the health
plan will make payment.
Gatekeeper:
When a primary care physician, the "gatekeeper",
serves as the patient's initial contact for medical
care and referrals.
Out
of Network Benefits: PPO's and HMO Point
of Service plans contain an out-of network benefit
tier that is different from benefit coverage for
network services. In PPO plans there can be cost
sharing requirements that are somewhat "hidden"
in the process. For example, a number of PPO plans
indicate a percentage coinsurance requirement for
out-of-network, but also limit the benefit to a
maximum allowable based upon average contract rates.
This means the member must pay a percentage coinsurance
based on the maximum allowable, plus the entire
amount that exceeds the maximum.
