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Insurance Plans Explained

by Richard Hencke, MD

Santa Cruz Emergency Physicians

HMO plans:

HMO stands for"Health Maintenance Organization". HMO plans are sold by insurance companies who contract with medical providers and hospitals to provide service. HMO plans have the most rules and restrictions, and are also the most economical.

HMO patients are required to get all their nonemergency care through their assigned primary care physician, who must be a member of the HMO group. This doctor is in charge of all specialty referrals and referrals for other specialty services such as physical therapy, etc.

HMO’s typically have little to no copay, and are the cheapest plans. However, to stay profitable, they must be efficient in order to stay afloat. This may mean fitting as many patients as possible into a given work day, with not a lot of time to spare.

Kaiser is a classic example of an HMO, and one of the first. Local HMO plans are found through both the Dominican and Santa Cruz Medical Foundations. The Central California Alliance for Health is another local HMO which is maintained for patients for whom Santa Cruz County is responsible (Medi-Cal).

PPO plans:

PPO stands for"Preferred Provider Organization". PPO doctors typically contract with an insurance company at a discounted rate in order to be eligible to see patients on a PPO plan. It is less restrictive than an HMO; referrals are not needed to see a specialist, physical therapist etc. – the patient may self-refer.

The tradeoff for less rules is that PPO plans have a higher premium and a higher copay. You may see doctors that are out of network if you are willing to pay an extra fee. The advantage of a PPO plan is more freedom of choice.

Not every hospital has a contract with every HMO or PPO plan. For example, Kaiser does not operate in Santa Cruz. Before purchasing a plan, it is wise to check to see if your doctor and hospital are covered.

POS plans:

POS stands for "Point Of Service". A POS plan is sort of a hybrid between an HMO and a PPO. It is a managed care plan; like an HMO it aims to keep costs down. It is like an HMO in that a primary care referral is needed for specialty care, but the specialist does not have to be in the network. Patients who self-refer, however, may be force to pay all or part of the bill themselves.

A POS plan tends to be less expensive than a PPO plan, and the co-pays tend to be higher. The more restrictions a plan has, the cheaper the premium.

In choosing any insurance plan, read carefully what you are buying. Look over the list of services, doctors, hospitals, etc. to make sure you know what you are getting.

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