Florida 2-15 Life, Health and Variable Annuity AgentGeneral Knowledge of Health InsuranceMedium
A small business is setting up a group health plan. They want a plan where employees are restricted to a specific network of providers, and referrals from a primary care physician (PCP) are required to see specialists, but out-of-network care is not covered at all. Which type of managed care plan best fits these requirements?
- APreferred Provider Organization (PPO)
- BHealth Maintenance Organization (HMO)
- CExclusive Provider Organization (EPO)
- DPoint of Service (POS) plan
Show answer & explanationAnswer & explanation
Correct answer: B. Health Maintenance Organization (HMO)
An HMO (Health Maintenance Organization) is characterized by a restricted network of providers, the requirement for PCP referrals to specialists, and typically no coverage for out-of-network care, except in emergencies. This aligns perfectly with the business's requirements.
Why the other options are wrong
- A. PPOs offer more flexibility with out-of-network care, albeit at a higher cost, and usually no PCP referral requirement.
- C. EPOs restrict members to a network but typically do not require PCP referrals for specialists within that network.
- D. POS plans combine aspects of HMOs and PPOs, allowing out-of-network care with higher costs and sometimes referrals.
Health Maintenance Organization (HMO)
A type of managed care health insurance plan that provides health care services through a network of doctors, hospitals, and other providers for a fixed monthly premium.
- Requires selection of a Primary Care Physician (PCP).
- PCP referrals are necessary to see specialists.
- Generally no coverage for out-of-network care (except emergencies).
- Focuses on preventive care and cost containment.
Memory trick: Managed care: How tight is the network, and who's the gatekeeper?