![]() ![]() ![]() Unlike an HMO, subscribers to a PPO may see any doctor, physician or other provider, but they pay less if they see a provider within the PPO’s network (hence “preferred”). PPOs recently over took HMOs as the most common MCO. HMOs also often make use of primary care physicians (PCPs), who may act as “gatekeepers.” Subscribers often need to be referred to specialists by PCPs. ![]() HMOs are often among the cheapest MCOs, but are also the least flexible. If a subscriber sees a provider outside fo this network, they may have to cover all of the expenses from that service out of pockets. HMOs operate by providing subscribers with a low premium and a strict network of providers a subscriber can see. Health Management Organization (HMO)Īt one time, HMOs were the most popular MCO option. Bear in mind that these are simplified descriptions of these managed care organizations. There are three main types of MCO, which we’ll discuss below. In general, MCOs have fixed costs that are lower than most indemnity plans, but restrict the options a patient has for where to get treatment. Managed care organizations, for instance, may confine the providers the subscriber may see to a specific network of doctors and facilities. ![]() Managed care organizations (MCOs) are groups, organizations, or other bodies that seek to reduce the cost of healthcare and increase the efficacy or health services through a number of means. Subscribers to indemnity plans have no restrictions on which providers they can see, but indemnity plans are typically much more expensive than managed care options, which we’ll review now. You’ll likely have a deductible and, depending on your insurance plan, a co-pay or co-insurance. Indemnity is the most basic and straightforward kind of insurance, in that you pay a premium to an insurance company to insulate you from medical expenses. Now that we’ve got an idea of how some of the basic aspects of health insurance work, let’s take a look at the different types of health insurance. The insurance company would pay the rest. For instance, if a subscriber receives a $300 medical procedure, and has a 80-20 co-insurance agreement with his or her insurance company, the subscriber would owe 20% of the bill ($60). Co-insurances are listed with the payer (insurance company)’s portion listed first, and then the subscriber’s. The co-pay does not count against the deductible.Ī co-insurance is a type of arrangement with the insurance company that divides the responsibility for payment by percentage. A copay is a relatively small, fixed sum that must be paid before any medical service is rendered. Subscribers may also have a copay or coinsurance arrangement with their insurance company. Many plans also have deductibles, which are monetary limits after which the health insurance company assumes the cost of the medical procedure or service. These may be assigned monthly or annually. Most insurance plans require subscribers to pay premiums, which are essentially subscription fees. Most plans share a few basic similarities. There are many different types of insurance coverage plans, and even more ways of paying for them. How Health Insurance WorksĮssentially, health insurance subscribers enter into an arrangement with a health insurance company in order to reduce the impact of the cost of medical expenses. Americans spend almost $8,000 annually per capita on healthcare, and a significant portion of that sum is spent on health insurance. Healthcare is one of the largest and fastest-growing sectors of the American economy. ![]()
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