Understanding Your Insurance

What is the difference between an HMO, PPO, and POS?

An HMO is a health maintenance organization. These generally require patients to select a primary care physician (PCP) to act as a "gatekeeper" to the patient's care, indicating that the primary care physician must issue referrals for the patient to seek care from a specialist.

A PPO is a preferred provider organization. These plans generally do not require gatekeepers and referrals to seek care from specialists.

A POS is a point-of-service plan. In this kind of insurance plan, patients have flexibility to choose between participating (in-network) and non-participating (out-of-network) providers. In this kind of plan, patients may or may not need to select a PCP and/or require referrals to seek care from specialists.


What is an indemnity plan?

An indemnity insurance plan covers the entire cost for provider services.
What is the difference between a primary care physician (PCP) and a specialist?

A primary care Physician (PCP) is a physician who is responsible for the administration and maintenance of a patient's care, such as issuing referrals when a patient needs to see a specialist. PCPs usually practice as internal medicine, family practice, general practice, and pediatric providers. Some health insurance plans consider obstetrician-gynecologists as PCPs.

A specialist is a physician who concentrates within a particular field of medicine or within a subset of a particular field. Some examples of specialists are cardiologists, surgeons, radiologists or pediatric oncologists.


What is coinsurance? And what are copayments and deductibles?

Coinsurance is a type of cost sharing in which the patient and the insurer split the payment of a certain service. For example, a patient may be responsible for paying 20% of allowed charges.

A copayment is the amount of money that the patient pays up front when they see a physician. For example, $30 copay may be required for in-network specialist services.

A deductible is the amount of money that a patient must make before the insurance company begins to make payments on a shared or total basis.


What are participating and non-participating providers?

A participating provider is a physician who is contracted with a health plan and agrees to provide health care services to those patients enrolled in the plan.

A non-participating provider is a physician or hospital that is not contracted with a health plan. Therefore, when patients seek care from non-participating providers, they generally cover the expenses themselves, or their expenses are subject to deductible and coinsurance payments.


What are in-network and out-of-network providers?

An in-network provider is a hospital or physician that accepts a patient's health plan reimbursement (including patient's copay) as payment in full. All care is subject to specific precertification and referral requirements as determined by the patient's employer and the insurance plan.

Out-of-network providers refer to any hospital or physician services that are rendered by a non-participating provider. Patients are generally responsible for part or all of billed charges.
(adapted from: Rognehaugh, R. (1998). The Managed Health Care Dictionary (2nd ed). Gaithersburg, MD: Aspen Publishing.)


What is the difference between a referral and precertification/preauthorization?

A referral is a request for additional care, usually generated by a primary care physician and given to a specialist. Referrals often serve as a notification of treatment with a particular provider.

Precertification or pre-authorization is certification that a particular inpatient admission or outpatient procedure is medically necessary and able to be performed by a specific physician/hospital. Patients should check with their insurance companies to determine which procedures and services require referrals and/or precertification/preauthorization.


What are health savings accounts and flexible spending accounts?

A health savings account (HSA) is an alternative to comprehensive health insurance. It is a savings vehicle that allows patients a different way to pay for their health care, enabling them to pay for current health expenses and save for future an retiree health expenses on a tax-free basis. HSAs can be used in conjunction with traditional health insurance policies as long as the policies are "high deductible" policies.
(adapted from: http://www.healthsavingsinfo.com/)

A Flexible Spending Account (FSA), also called a flex plan or reimbursement account, is an employer-sponsored benefit that allows you to pay for eligible medical expenses on a pre-tax basis.
(adapted from: http://financialplan.about.com/cs/insuranc1/a/FlexSpendPlan.htm)