Your healthcare plan is one of the more important purchases you will make each year for yourself and your family. Your choice affects the quality of your healthcare, as well as your budget.
Managed healthcare plans are the most common forms of insurance. You have four main types of plans:
- Health Maintenance Organizations (HMOs).
- Preferred Provider Organizations (PPOs).
- Point of Service (POS).
- Exclusive Provider Organizations (EPOs).
HMOs and PPOs are the best-known plans. They account for over 40% of the policies written in the federal health insurance exchanges. POS and EPOs are far less well-known (12% and 7%) but are offered by some health insurers and employers.1
Another type of “plan,” the High-Deductible Health Plan (HDHP), has grown in popularity as employers seek to contain healthcare costs. It is more of an overlay on plans that look like HMOs or PPOs, but with very high deductibles and associated Health Savings Accounts (HSAs). Premiums tend to be low.
The Importance of Flexibility
Flexibility is an essential factor for many when they choose a healthcare plan. It determines:
- What doctors and hospitals you can visit.
- If you need referrals to access them.
- If you need preauthorization for certain services.
In managed healthcare, the greater the flexibility, the higher the cost of coverage. But, you can adjust that cost as you finetune your plan.
What is an EPO Plan?
Exclusive Provider Organization (EPO) plans get their name from having to get healthcare exclusively from their provider networks. This aspect is inflexible. You and your doctor do not get reimbursed if you go outside the network. (They make an exception for emergencies.)
You can see a specialist without a referral from a primary care physician. But you are fully responsible for ensuring your specialist is in your network.
The more costly and elective services require preauthorization or prior authorization. Since your primary care physician is not involved in your decision, insurers require preauthorization to help avoid medically unnecessary expenditures. Your EPO will not pay if you fail to get preauthorization.
Your plan’s Summary of Benefits and Coverage lists the services needing preauthorization. They are usually CT scans, MRIs, expensive prescription medications, surgeries, hospitalizations, and medical equipment.
In summary, your insurer can offer favorable rates for an EPO plan by limiting coverage to:
- Medical services to hospitals and doctors with which it has negotiated prices.
- Medically necessary expenses.
What are the Pros of EPOs?
- No referral to see a specialist. That saves the copayment to see your primary care physician and avoids delays.
- A primary care physician is optional.
- Emergency care is covered even if you go out of your network.
- Little to no paperwork since you only work with in-network providers.
- Some have broad, national networks so, you may have access to an in-network doctor when you travel.
What are the Cons of EPOs?
- You may not be able to continue with your current doctor or specialists.
- You must use in-network providers unless it’s an emergency.
- For EPOs with local networks only, non-emergency medical needs will not be covered when you travel.
- Even if your insurer covers out-of-network emergencies, it can still bill you for any difference between your insurer’s payments and provider charges.
- You are responsible for staying in your network.
- Without a primary care physician coordinating your multiple specialists, that function is up to you.
- You need prior approval for expensive services.
- Doctors are paid for each service provided (“fee-for-service” payments). A doctor may be motivated to overload the patient schedule and provide more care, follow-up visits, tests, and x-rays than needed.
An EPO may be ideal if you don’t mind restrictions to specific doctors and hospitals but want the flexibility to see specialists without referrals.
How Much Does an EPO Plan Cost?
Compared to HMOs, PPOs, and POS plans, monthly premiums for EPOs are usually in the middle of the price range for all plans.
Premiums are also affected by your age and where you live.
Besides your monthly premium, your total healthcare cost will include:
- Your deductible, or how much you have to spend before the insurer pays anything.
- Coinsurance and copayments, or payments you make each time you get medical service after you’ve reached your deductible.
- An out-of-pocket maximum, or the most you have to spend each year before your insurer pays 100% of all covered services.
The following are sample EPO plans from one insurer for an applicant in Jackson County, MO, no age specified, no discounts or subsidies:2
Comparing EPOs with Alternative Plans
EPOs generally compare with other types of plans as follows:
Where Can I Get an EPO Plan?
Your employer must offer an EPO plan for you to get one through your work. You can get an EPO plan on your own through the marketplace (also called the health insurance exchange).
If you believe you might qualify for subsidies, you will have to buy a plan available through the exchanges. Check here to see if you are eligible.