There are four basic plan design types. They are based on two elements. Is there a Primary Care Provider (PCP) gatekeeper requirement? Is there an out of network benefit for non-emergency changes?
That is it. There is nothing inherent to a Preferred Provider Organization (PPO) that makes it immediately superior to an Health Management Organization (HMO) or an Exclusive Provider Organization (EPO) plan design. Plan type does not drive network. So when you have to choose a plan during open enrollment, don’t automatically choose a PPO until you look at the trade-offs.
If we hold everything else equal, PPO plans will be more expensive than anything else. They are the most permissive. They don’t require referrals from PCPs for services, and they will give some money to any provider anywhere in the country when they perform a service. There is a lot of leakage from the contracted network.
EPO’s don’t pay out of network benefits. They also don’t require primary care referrals for in-network specialists. They tend to be a middle ground on the hassle factor. HMO and Point of Service (POS) plans require PCP referrals for complex and specialty care. Some plans will have stringent gatekeeper requirements. Other insurers will have loose requirements. That will vary. HMO plans will not pay non-emergency out of network benefits. POS plans will pay out of network charges to some degree.
Network size is independent of plan type. Some HMO networks are massive and some PPO networks are tiny. Some insurers will have one basic network that they use for multiple plan types. It will all vary.
The top 20 plans in the country according to NCQA in 2015 were a mix of plan types. Not all PPOs are great, not all HMO’s are bad.
When you are choosing your plan during open enrollment, please be ready to think through the trade-offs.