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HMOs, PPOs, and Indemnity Plans

Health Maintenance Organizations, or HMOs

  • Offer a restricted panel of physicians and hospitals
  • Put the focus on:

    • Preventive medicine
    • Easy access to routine care
    • Closely managing healthcare expenditures
  • Are most common on the Pacific Coast and in large metropolitan areas
  • Most require patients to have their care directed by a gatekeeper, a primary care physician who controls the patient's access to specialists, expensive diagnostic procedures, and other high-priced services.
  • Offer no reimbursement for treatment outside their network
  • Depending on their efficiency and panel of doctors, the premiums charged by HMOs are generally lower than what PPOs charge, and nearly always well below the rate charged by open-ended Indemnity Plans.

Indemnity Plans

Indemnity Plans are at the other end of the spectrum from HMOs. They cover visits to any doctor, any specialist, and any other medically necessary service, usually with few managed care controls. There are still some indemnity plans around, but in nearly all markets, they have been priced out of business.

Preferred Provider Organizations, or PPOs

  • Represent the middle ground between HMOs and indemnity plans
  • Are very popular with both employers and employees
  • Work to preserve the best features of HMOs, such as:

    • Affordable routine care
    • Preventive services
    • Low-cost office visits
  • Eliminate gatekeepers and open up access to all of the providers in the community
  • Rely on members using "in-network" doctors and hospitals for most of their care
  • In-network providers have agreed to reduce their charges in exchange for higher patient volume
  • The in-network providers are the "preferred" ones, and the PPO pays a higher percentage of their claims, generally 90 or 100 percent. When members want to see an "out-of-network" provider, they are free to do so, and they will pay a larger share of the bill.

The Unitarian Universaslist Association has chosen to offer three PPOs: a standard plan that offers benefits that closely mirror HMO plans for in-network care; and two with a high deductible, for those who want a lower premium and are willing and able to budget for unforeseen expenses.

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