PPO, or Preferred Provider Organization, health plans are generally more flexible than EPO (Exclusive Provider Organization) plans and have higher premiums. This comparison explains how.
A health plan's network is the set of healthcare providers — e.g., hospitals, doctors, and specialists — with whom the insurance company has contractual agreements in any given plan year. These agreements set a predetermined price for their healthcare services, and these prices are heavily discounted from the provider's list price that is billed to uninsured patients.
Because prices are negotiated in advance, and because of an existing contractual relationship, insurance companies prefer to deal with providers in their network and encourage consumers to stay within the network when they see a doctor. This is done by making it more expensive for the consumer to seek healthcare outside the plan's network.
PPO plans cover out-of-network visits, although the level of coverage is lower than in-network benefits. For example, copays and coinsurance is usually higher for out-of-network benefits. EPO plans, on the other hand, do not cover out-of-network benefits at all.
Neither EPO nor PPO plans require members to see a PCP (Primary Care Physician), which is a restriction for HMO members.
While this page describes the main differences and similarities between EPOs and PPOs in general, you are strongly advised to closely read documentation before subscribing to any individual plan, to ensure that it meets all of your needs.
Most PPOs and EPOs cover basic medical treatment, preventative care, emergencies, and long-term and specialist treatment such as surgeries and physical therapy. EPO and PPO plans attempt to achieve as wide a range of coverage as they can, but you should consult the list of healthcare providers that are part of an EPO's or PPO's network before signing up, to ensure that the kinds of treatment you may need are represented. If a particular kind of treatment is not available, you will be able to access it from outside your insurer's network, but there may be an additional cost.
The main difference between PPOs and EPOs is in regard to flexibility, which is indicated by the names of the two plans. In a PPO, the insurer has a network of healthcare providers that it prefers to work with. However, if you need or want to go to a healthcare provider from outside this network, the PPO will still help to pay for your treatment. However, you will be expected to provide a larger contribution than if you were treated within the network.
In an EPO, the insurer has a network of healthcare providers that it works with exclusively. Apart from in exceptional circumstances, such as emergency care, an EPO will not pay anything toward treatment undertaken with healthcare providers from outside its network.
PPOs are usually more expensive because they are more flexible in allowing you to seek treatment outside of their network of preferred providers. The cost of a PPO plan will also increase the more often you take advantage of that freedom, as you are expected to cover a higher proportion of the costs incurred in seeing healthcare providers from outside the network.
EPOs are usually cheaper due to the restrictions on which healthcare providers you can visit. Keep in mind that if you visit a healthcare provider from outside your EPO's network, you will almost certainly have to pay the full cost of any treatment. In both cases, expect to have to contribute at least a small sum towards any medical treatment, including visits to your doctor.
Both EPO and PPO plans usually require you to make a small payment to receive treatment from a provider within the network. This payment is known as a "copayment" when it is a fixed cost and "coinsurance" when it is a percentage of the total cost; it is a payment on top of any monthly premium costs. (See also Coinsurance vs Copay.)
In an EPO plan, you must also pay the full expense of any treatment received from a healthcare provider outside the network. In a PPO plan, treatment received from outside the network is partially covered by the insurer, but you can expect to pay more than if you stay within the network.
These additional fees are said to be included in the plans to ensure people do not take advantage of the system by visiting their healthcare providers more often than necessary.
In most cases, neither PPO nor EPO plans require you to have a dedicated doctor (often known as a PCP, or Primary Care Physician) refer you to specialists for further treatment. However, you are free to develop a relationship with a doctor of your choosing, although additional costs will apply if the doctor you choose to see is outside of your network.
Because they do not require referrals from a PCP, PPO and EPO plans work on the basis of pre-authorization. In other words, you must contact your insurance company before undergoing any major treatment to ask them to authorize the work. If you do not do this, the insurance company will not be liable to pay, even if the treatment can be shown to be medically necessary. Often, your doctor will offer to arrange this pre-authorization for you, but it remains your responsibility to ensure that authorization has been given before beginning the treatment.
Many health insurance plans do not cover dental expenses, and this is particularly the case for insurance plans bought through the health insurance exchanges created by the Affordable Care Act, meaning dental insurance must be bought separately if needed. However, many of the insurers offering PPO and EPO plans offer the same plans with the same terms for dental care—with EPOs only covering treatment in network, and PPOs covering in-network and out-of-network treatment to differing extents. However, many dental plans will have an "annual maximum." This is the most that the insurer will cover in a single year, and for treatment costs beyond this you may face higher coinsurance charges or will have to cover the entire cost of treatment.
The exact plans available to you will depend on where you live, and many insurers will offer some combination of PPO and EPO plans depending on your needs and your location.
Insurance providers include Blue Cross and Blue Shield (EPO and PPO), Cigna (EPO and PPO), First Health (EPO and PPO), United Healthcare (EPO and PPO), Humana (PPO), Beech Street (PPO), Aetna (PPO). Many of these providers also offer dental plans, as does Delta Dental (EPO and PPO).
The main difference between EPO and PPO plans and Health Maintenance Organizations (HMOs) is the need for a Primary Care Physician (PCP) in an HMO. This means that in an HMO plan you do not contact the insurer to get pre-authorization for treatment, but must be referred to a specialist by a PCP who is a member of the HMO's network. Like EPOs, HMOs do not cover out-of-network treatment except in some emergencies.
A Health Savings Account (HSA), on the other hand, offers more freedom but requires more of a contribution from the patient. HSAs act as tax free savings accounts for medical expenses, allowing people to save their own money or accept contributions from their employers which can later be used for any medical treatment the HSA subscriber feels necessary (with the exception of certain medicines which require doctor's prescriptions). However, if medical treatment is not needed, subscribers can also withdraw from the HSA for other reasons, although they face tax penalties for doing so.
In many ways, EPOs and PPOs function very similarly when you stay in their networks. So deciding which one is better really comes down to fine print, cost, and how likely you are to need or want care from out-of-network providers. If your favorite doctors are not in an EPO plan, you may be better off going with a PPO plan, which may or may not have your doctor in network but will cost less overall even if the doctor is not in network.
Nick Jasuja is an entrepreneur and investor with a passion for personal finance. He achieved financial independence by building and acquiring multiple online businesses and investing in real estate. With an MBA in Finance and bachelor's degree in Computer Science, he brings a unique blend of technical and financial knowledge to his writing. His hands-on experience with tax planning and estate management, combined with his commitment to financial literacy, allows him to provide practical insights to help others navigate their financial journeys.
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