EPO Insurance—What It Is and How It Works

An EPO health plan is a managed health insurance plan that requires you to see healthcare providers within the EPO network. EPO plans won't usually pay for out-of-network care except in an emergency situation.

If you are considering an EPO plan or are already enrolled in one, it's important to understand exactly how these plans work so you can use yours effectively and avoid expensive mistakes.

This article discusses EPO health insurance plans, how they work, and what you need to know to make the best of one.

What Is an EPO?

An EPO insurance plan is a type of managed care health insurance. EPO stands for exclusive provider organization. This means you have to get your health care exclusively from healthcare providers the EPO contracts with, or the EPO won’t pay for the care. As is the case with other health plans that require you to stay within a provider network, EPOs will pay for out-of-network care in emergencies.

Like their cousins PPOs and HMOs, EPO health plans have cost-containment rules about how you get your health care. If you don’t follow your EPO’s rules when you get healthcare services, it won't pay for the care.

An EPO health plan's rules center around two basic cost-containment techniques:

1. For services to be covered, you have to receive them from healthcare providers and hospitals with whom the EPO has negotiated discounts, although there's an exception for emergency care.
2. Healthcare services are limited to things that are medically necessary or that make your health care costs lower in the long run, like preventive care.

How Does EPO Health Insurance Work?

Make sure to read your health insurance policy very carefully. Staying in-network and getting pre-authorizations when needed could save you a lot of money. Let's look at the most important concepts to understand.

You Must Use In-Network Providers

Every EPO has a list of healthcare providers that belong to their provider network. This network offers every type of healthcare service including general practitioners, specialists, pharmacies, hospitals, labs, X-ray facilities, speech therapists, home oxygen, and more.

In an EPO health plan, you can only get healthcare services from in-network providers. If you get care out-of-network, the EPO won’t pay for it; you’ll be stuck paying the entire bill yourself. Accidentally getting out-of-network care can be a very expensive mistake when you have an EPO.

There are three exceptions to the in-network requirement:

1. If the EPO doesn’t have an in-network provider for the specialty service you need: If this happens to you, prearrange the out-of-network specialty care with the EPO. Keep your EPO in the loop.
2. You were getting specialty care before joining: If you’re in the middle of a complex course of specialty treatment when you become an EPO member, and your specialist isn’t part of the EPO, your EPO will decide whether or not you may finish the course of treatment with your current healthcare provider on a case-by-case basis.
3. For true emergencies: If you’re having a stroke, heart attack, or another true emergency, go to the nearest emergency room whether or not it’s in-network with your EPO. Under the terms of the Affordable Care Act, health plans are required to cover the cost of emergency care received at the nearest out-of-network facility as though it were in-network care. If you need to be admitted to the hospital from the ER, however, your EPO may ask the out-of-network ER to transfer you to an in-network hospital for admission.

You Likely Don't Have to Have a Primary Care Physician

Your EPO health plan generally won’t require you to have a primary care physician (PCP), although getting a PCP is still a good idea.

But the "rules" for primary care (and referrals, as discussed below) under EPOs, HMOs, PPOs, and POS plans have evolved a bit over time, and tend to be somewhat fluid. For example, Cigna has an EPO plan in Colorado that does require members to have a PCP.

So the only real "rule" is that you need to pay close attention to the specific details of your own plan. It's true that most EPOs don't require you to have a PCP, but don't assume that yours doesn't.

You Likely Don't Need to Have a Referral to See a Specialist

Most EPOs will not require you to get a referral from a primary care healthcare provider before seeing a specialist. This makes it easier to see a specialist since you’re making the decision yourself, but you need to be very careful that you’re seeing only specialists that are in-network with your EPO.

Referrals can be a grey area too. For example, the Cigna EPO in Colorado requires PCPs and also requires referrals to see a specialist. So again, the most important thing is that you're familiar with the rules that apply to your specific plan, or to any plan that you're considering as an alternative. Don't assume anything based simply on whether the plan is an EPO, PPO, POS, or HMO.

You Will Be Required to Get Pre-Authorization for Expensive Services

Your EPO will likely require you to get permission for some services, especially the most costly. If a particular service requires pre-authorization (prior authorization) and you don’t get it, your EPO can refuse to pay. The services that require authorization, however, are elective and not emergency services so a small time delay will not be life-threatening.

Pre-authorization helps your EPO keep costs down by making sure you really need the services you get. With HMOs, your primary care provider is responsible for making sure you really need the services you get. Since your EPO likely doesn’t require you to have a PCP, it uses pre-authorization as a mechanism to reach the same goal.

Although your healthcare provider may volunteer to get pre-authorization for you, it’s ultimately your responsibility to make sure you get a service pre-authorized before you receive the health care. If you don’t, your EPO has the right to refuse to pay for the care, even if the care was medically necessary and you got it from an in-network provider.

Pre-authorization takes time. Occasionally, you’ll have the authorization before you even leave the healthcare provider’s office. Usually, it takes a few days. In bad cases, or if there’s a problem with the authorization, it can even take weeks.

You Don't Have to File Claims

You don’t have to hassle with bills and claim forms when you have EPO health insurance since all of your care is provided in-network. Your in-network healthcare provider bills your EPO health plan directly for the care you receive. You’ll just be responsible for paying your deductible, copayment, and coinsurance.

How EPO Differs From HMO and PPO

EPOs and HMOs are similar. The primary difference between an EPO and an HMO is that you do not typically have to have a primary care physician when you use an EPO. An EPO plan also typically has a larger network of providers than an HMO plan.

EPOs are similar to PPOs in that you don't usually have to get a referral to see a specialist. However, PPOs tend to be more flexible than EPOs and HMOs since they give you more options to go out of network.

Cost-Sharing Requirements in an EPO are Generally Lower Than They Would Be in a PPO

Cost-sharing is a practice in which both you and your insurance company pay for a portion of services. Your portion of the cost-sharing can include deductibles, copayments, and/or coinsurance.

There are no hard-and-fast rules when it comes to cost-sharing in the various types of health plans. Some EPOs have high cost-sharing, while others have low cost-sharing. But in general, EPOs tend to have lower cost-sharing than PPOs.

You can think of that as a trade-off for the fact that the EPO limits you to only using in-network medical providers, whereas PPOs will cover a portion of your costs even if you see out-of-network providers. Because of its generally lower cost-sharing and low premiums, an EPO is often one of the most economical health insurance choices.

Pros and Cons of EPO Health Insurance

EPOs have some traits in common with HMOs and some traits in common with PPOs. As such, you might consider an EPO to be a cross-breed between an HMO and a PPO: Like an HMO, you have to stay within the plan's network. But like a PPO, you're usually not required to get a referral from your premium care healthcare provider in order to see a specialist.

Many people like the ease of being able to schedule an appointment with a specialist without consulting a primary care physician. At the same time, this can sometimes be a challenge in that you are limited to certain specialists within your network.

Having an EPO also requires you to actively get involved in planning expensive services or procedures, and leaves you primarily responsible for completing any prior authorizations required. Overall, the combination of its low premiums and low cost-sharing makes EPOs a good choice for many people.

Summary

An EPO is a type of managed healthcare plan that requires you to stay in-network when obtaining healthcare services except in emergency situations. You do not usually need to have a primary care provider when you belong to one of these plans, and you can see a specialist without getting a referral.

EPOs can be difficult to manage, however, since you will need to get authorization for many expensive services that are not deemed medically necessary. If you obtain healthcare services from a provider that is not in network or do not receive authorization when required, you could end up responsible for your healthcare bill.