A network type defines the group of healthcare providers—such as doctors, hospitals, and labs—that have agreed to provide services to plan members at negotiated rates. The network type determines the way a member accesses healthcare services with a plan, and whether approval is needed before getting additional care. Network types include:
HMO (Health Maintenance Organization): An HMO plan requires the selection of a Primary Care Physician (PCP) who will be the first point of contact for all healthcare needs. Referrals from the PCP are necessary to see a specialist, and coverage is limited to providers within the HMO network. This plan typically offers lower out-of-pocket costs but less flexibility in choosing healthcare providers. Some HMOs today are considered smaller-network (i.e. have fewer providers included) but do not require referrals.
PPO (Preferred Provider Organization): PPO plans provide more flexibility in selecting healthcare providers and do not require a PCP or referrals to see specialists. Employees can see any doctor, but using in-network providers will reduce costs. While PPOs offer more choices, they often come with higher premiums and out-of-pocket expenses.
EPO (Exclusive Provider Organization): An EPO plan is a middle ground between HMO and PPO. A PCP or referrals to see specialists are usually not required, but coverage is only available for providers within the EPO network, except in emergencies. EPOs usually have lower premiums than PPOs but offer less flexibility.
POS (Point of Service): POS plans combine features of both HMO and PPO plans. Usually, a PCP must be chosen, and this PCP can refer to specialists within the network. Out-of-network providers can be seen but at a higher cost. POS plans provide a balance of cost savings and flexibility.