Defined Network Plan
A defined network plan is the term used in Wisconsin insurance law to refer to any health benefit plan that creates incentives for its enrollees to use network providers. Some defined network plans will provide coverage only if the enrollee uses network providers and other plans will pay a larger portion of the charges if the enrollee uses network providers. HMOs, point-of-service plans and preferred provider plans are examples of defined network plans. This type of plan is sometimes referred to as a managed care plan.
Health Maintenance Organization (HMO)
An HMO is a health insurance plan that provides comprehensive, prepaid medical care. It differs from a traditional insurer in that it both pays for and provides the medical care. Persons insured by an HMO plan are referred to as enrollees. An HMO usually operates on a closed panel basis. This means the enrollees are required to seek care from a medical provider who is either employed by or under contract to the HMO.
HMOs limit care to a specific geographic area. Except for serious emergencies or the need for urgent care outside the service areas, the HMO will probably not pay for care enrollees receive from a provider who is not affiliated with the HMO unless the HMO physician refers you to that provider.
HMOs are regulated as insurance companies by the OCI. To do business in the state, an HMO must meet certain financial requirements and abide by relevant insurance laws. OCI must approve policies before they are sold to ensure they comply with state laws.
Information is available on the OCI's Web site regarding licensed HMOs and the counties they serve.
Point-of-Service Plan (POS)
A POS plan is essentially an HMO that allows members to use services provided outside of the network without prior approval from a network doctor. POS plans offer lower deductibles and no coinsurance for visits to doctors inside the network. Visits outside the network normally require the payment of deductibles and coinsurance the same as a standard insurance policy.
Preferred Provider Plan (PPP)
A PPP is a form of managed care closest to an indemnity plan. A PPP has arrangements with doctors, hospitals, and other providers of care who have agreed to accept lower fees from the insurer for their services. A PPP pays a specific level of benefits if certain providers are used and a lesser amount if non-PPP providers are utilized. A PPP must provide reasonable access to network providers in the service area. However, a PPP is not required to offer a choice of participating providers in each geographic area.
PPPs may require that enrollees pay coinsurance of up to 50% for services provided by nonparticipating providers. Enrollees should read their policies carefully before seeking services from nonparticipating providers.
A PPP operates in a certain geographic area, is limited to specific providers, and is regulated by OCI. A PPP that has a provider agreement with a hospital may not have an agreement with every provider who provides services at the hospital, such as anesthesiologists, pathologists, and radiologists.
Many insurers that offer standard health insurance policies also offer some type of preferred provider plan. You should ask your agent to provide you with information on preferred provider plans in your area.