Exclusive Provider Organization (EPO) Health Insurance Plans

Exclusive provider organization (EPO) health insurance plans are relatively new to the American health insurance scene. As of early 2018, they accounted for less than 10 percent of total health insurance plans sold in America.

However, that figure is deceptive. EPOs are rapidly gaining in popularity among both insurance companies and families seeking health insurance. Between 2017 and 2018, the number of Americans choosing EPOs plans jumped by almost 50 percent.

One of the reasons EPOs hold such appeal is that they were specifically designed to help insurance companies and consumers adapt to changes in federal laws on health insurance. When the Affordable Care Act (ACA) was passed in 2010, it implemented a legal requirement for all Americans to carry health insurance. At the same time, it denied insurers the right to refuse coverage to individuals based on their health or pre-existing conditions. It also restricted insurers’ ability to charge higher rates or limit care to older or less healthy insurance holders who, on average, cost significantly more money to insure.

In response to these changes, insurance companies crafted and launched EPOs. Exclusive Provider Organization health insurance plans are a form of managed care that. They give buyers an opportunity to secure ACA-compliant insurance with low monthly premiums. Insurers like them because EPOs tend to be lower cost than other forms of plans, which helps companies balance their risk and expenses profiles.

The Role of Primary Care Providers

It is a common practice for managed care plans to insist that policyholders select a physician, physician’s assistant or nurse practitioner to serve as their primary care provider (PCP). Policyholders who refuse or fail to identify a provider may be assigned a default PCP by their insurance plan.

Exclusive provider organization plans are generally more flexible on primary care provider requirements than other types of health insurance plans. Most EPOs do not require that policyholders have a designated PCP at all. Exclusive provider organization health insurance plans rarely, if ever, require policyholders to get referrals from a primary care provider before they can see specialists. This feature can make EPO plans an ideal fit for cost-conscious consumers who do not have or do not want a primary care provider. EPOs often appeal to consumers who want the autonomy to largely direct their own health care, as well.

In-Network Versus Out-Of-Network Care

Like health maintenance organization (HMO) and Preferred Provider Organization (PPO) health insurance plans, exclusive provider organization plans are built around networks of providers. Insurers vet health care facilities, physicians and other providers in a certain geographic area and select a certain percentage of them to work with. Insurers may base their selections on provider experience, objective quality ratings, the range of services a facility provides, cost factors or other characteristics.

As a rule, EPOs are significantly more strict than other types of plans when it comes to paying for in-network and out-of-network care. EPOs often work with much smaller networks of providers than HMOs or PPOs. This means that policyholders may be approved to use far fewer doctors, pharmacies and hospitals than they would be under another plan.

On the other hand, policyholders typically have more freedom to seek care within the EPO’s network as they see fit than they would under other types of plans. Consumers in EPO plans are free to see a variety of in-network providers and specialists at their discretion without the need to procure referrals first.

EPO policyholders can seek services from providers and facilities, such as hospitals, that are not part of the approved network. However, no services delivered by out-of-network providers or at unapproved facilities will be covered or reimbursed. This includes products (e.g. prescription medications) and services that would be fully covered under the consumer’s plan if in-network providers delivered them.

In most cases, genuine emergency care will be covered regardless of when, where and by whom it is delivered. What qualifies as an emergency may vary from plan to plan. EPO policyholders must carefully review their plans’ guidelines when selecting and getting an insurance policy to ensure they are clear on what care is and is not exempt under the emergency care clauses.

Premiums And Other Costs

The costs of health insurance plans that are exclusive provider organization are generally lower than the premiums on PPOs, HMOs and other types of health care plans. However, both premiums and deductibles will differ from plan to plan and company to company. EPO policyholders can expect to be responsible for co-pays on covered services, regardless of the company and EPO plan they select. Consumers may also be required to submit co-pays on emergency services delivered by out-of-network providers.

Factors that can influence the cost of EPO plans include the following:

  • Family size
  • The number of primary and specialty services accessed
  • The medical necessity of some types of care
  • Prescription medications

EPO policyholders can actively work to keep their out-of-pocket expenses low by only seeking care from approved providers. Being aware of what services are and are not covered by their plans and avoiding unnecessary services that are not covered or which are only partially covered can also contribute to minimizing costs.

ACA Compliance

The Affordable Care Act (ACA) requires that all health insurance plans cover certain types of care classified as “essential health benefits.” These include the following:

  • Emergency services and hospitalization
  • Care for pregnant women, newborns, infants and children
  • Mental health care and substance use and abuse treatment services
  • Rehabilitation, habilitation and related equipment
  • Ambulatory services and laboratory testing
  • Prescription medications
  • Preventative health care

Each state also dictates a list of “mandated benefits” that insurance policies must cover. Some of these benefits overlap with products and services that are considered essential health benefits. Others, such as lead screening, cochlear implants and costs associated with clinical trials related to cancer, may be entirely separate.

Due to regulatory oversight, consumers can generally expect that any plans for sale in their states of residence will meet both federal and state requirements for essential health benefits and mandated benefits. That said, consumers should be aware that although insurers are required to cover those categories of care, they are allowed to set certain limits of the types and frequency of care they provide within each category beyond certain minimum limits. As with all forms of care, consumers should thoroughly review their plan materials and speak to an insurance company representative for clarification if they have questions.

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