What is a health insurance network? Which one is right for me?
Health insurance provider networks are groups of hospitals, clinics, doctors and specialists who are contracted with that network. The network then contracts with a health insurance carrier; the plans offered by that carrier can include in-network benefits with contracted providers. Health plans may set specific parameters around seeking care from in- and out-of-network providers
While health insurance networks have always been a consideration, we seem to hear a lot about them in the age of Obamacare – especially narrow networks. Which plan network type is best for you depends largely upon how you use healthcare services and what you are looking for in a health insurance plan.
If you have specific questions about the plan you are considering, contact the health insurance company’s member services. If you need help finding coverage, work with health insurance producer (i.e., agent or broker).
Common health plan network types
Below, we have provided general definitions for health insurance plan networks often encountered by consumers who buy their own coverage:
- Health maintenance organization (HMO)
- Preferred provider organization (PPO)
- Exclusive provider organization (EPO)
There can be variation within these common network types. In other words, not all HMOs, PPOs, or EPOs will function exactly the same way. Please keep in mind that plan benefits and restrictions will vary.
HMO – health maintenance organization
A health maintenance organization network contains costs by restricting covered care to participating providers. As such, care received from out-of-network hospitals and physicians is not typically covered – you may wind up paying 100 percent of the bills from providers who are not in the network.
HMO plans usually require you to select a primary care physician (i.e., PCP), and that individual must provide you with a referral if you need to see another doctor or specialist. In other words, your PCP coordinates your care.
Example of how an HMO works
Jill begins to experience symptoms of hyperthyroidism and sees her primary care physician. They decide upon a course of treatment, but Jill’s condition does not improve. Her PCP refers her to an endocrinologist, a specialist who works with hormonal conditions. Jill contacts her health insurance company’s member services department and requests assistance with finding an in-network endocrinologist. She finds one, and her plan benefits apply to the care she receives. Since, in this case, Jill has met her plan deductible for the year, her plan pays its share and she is billed based on her coinsurance percentage.
Good to know
- Before you see another doctor, your primary care physician must typically provide a referral.
- Premium tends to be lower.
- Coverage often limited to in-network providers—you may have to pay 100 percent for out-of-network care and services.
PPO – preferred provider organization
A preferred provider organization network is one in which the health insurance carrier has a contract with a specific provider network. Those insured by the carrier’s plans have access to in-network benefits with contracted providers, and those in-network benefits are often provided at a reduced rate. PPOs typically allow you to choose in- or out-of-network healthcare providers and will often cover a certain percentage of out-of-network care regardless of whether or not it is an emergency.
If your health insurance plan is a PPO and you receive out-of-network care, you will typically pay more out of pocket. Conversely, you will generally pay less when you receive care from in-network providers.
Example of how a PPO works
Jill begins to experience symptoms of hyperthyroidism. Her friend recommends a local endocrinologist, Dr. Smith, whom she’s seen for years. Jill locates the phone number for her plan network on the back of her insurance ID card (she could also call the insurance company’s member services number to ask what her network is). She calls the network directly to find out whether or not the specialist is contracted.
Jill learns that Dr. Smith is not contracted with her plan’s network, but decides to see her instead of an in-network endocrinologist. The out-of-network care Jill receives is covered, but at a lower percentage. Jill would have saved some money by seeing an in-network provider, but she felt it was worthwhile to pay more out of pocket and go on her friend’s recommendation.
Good to know
- PPOs tend to offer more flexibility of choice when it comes to providers.
- Out-of-network care will usually be covered but you may have to pay more than you would in network.
- You may pay less for care received from in-network providers.
EPO – exclusive provider organization
An exclusive provider organization network functions much like an HMO. EPOs will almost always require in-network care unless there is an emergency. The key difference between an HMO and an EPO is that you typically will not need a referral to see another doctor or specialist beyond primary care physician.
Example of how an EPO works
Jill begins to experience symptoms of hyperthyroidism. She decides to see an endocrinologist, Dr. Smith, recommended by her friend. After contacting her health insurance plan’s network using the network phone number listed on her ID card, she learns that Dr. Smith is a contracted provider. Because her particular EPO plan does not require her to get a referral from her PCP, she calls the endocrinologists office and schedules the appointment. Jill and her health plan split the cost of her visit as outlined in her benefits.
Good to know
- As with HMOs, covered care is almost always restricted to network providers.
- You may not be required to get a referral to see providers beyond your PCP.
- You may have to pay 100 percent for out-of-network care and services.
Choosing your health plan with a network in mind
Depending on your personal preferences and your healthcare needs, network type may or may not weigh heavily into your decision to purchase a certain health plan. For instance, if you strongly prefer a certain doctor or hospital, you will want to be sure those providers are contracted with the health insurance plan’s network before you buy. Of course, plan networks are subject to change. If you prefer to save as much money as possible and don’t care which providers you use, you may not give much thought to network.
Also consider that your area may not have plans available in every network design. For instance, state-based and federally facilitated health insurance exchanges are increasingly without PPO plans as insurance companies reduce their offerings to HMOs and EPOs.
As mentioned above, if you have questions about a specific plan, contact the health insurance company’s member services. If you need help selecting a plan, consider working with health insurance producer (i.e., agent or broker).
AHIP Foundation. “A Consumer Guide to Understanding Health Plan Networks.” Accessed Nov. 11, 2016. www.ahipfoundation.org
Bureau of Labor Statistics. “Definition of Health Insurance Terms.” http://www.bls.gov/ncs/ebs/sp/healthterms.pdf
HealthCare.gov. “ Health Insurance Plan & Network Types: HMOs, PPOs, and More.” https://www.healthcare.gov/choose-a-plan/plan-types/
Mears, Teresa. “Open Enrollment: Deciding Between a PPO, HMO, EPO or POS Plan.” U.S. News & World Report. Nov. 24, 2015. https://money.usnews.com/money/personal-finance/articles/2015/11/24/open-enrollment-deciding-between-a-ppo-hmo-epo-or-pos-plan