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EPO Health Insurance—What It Is & How It Works

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Updated December 22, 2013

Considering enrolling in an EPO health plan? Understand what, exactly, it is and how it works to make sure it will suit your needs.

Already have EPO health insurance? Understanding the ins and outs of how your EPO works will help you use your health plan effectively and avoid expensive mistakes.

What Is an EPO?

A type of managed care health insurance, EPO stands for exclusive provider organization. EPOs got this name because you have to get your health care exclusively from health care providers the EPO contracts with or the EPO won’t pay for the care.

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 health care services, it won't pay for the care.

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

  1. Where and from whom you get health care services is limited to providers that the EPO has negotiated discounts with.
  2. Health care 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?

  • Cost-sharing requirements in an EPO are low.
    Cost-sharing like deductibles, copayments, and coinsurance are kept to a minimum with an EPO. In fact, some EPOs don’t require any deductible or coinsurance at all, and just charge a small copayment at the time of service. Because of its low cost-sharing and low premiums, an EPO is one of the most economical health insurance choices.
     
  • You must use in-network providers.
    Every EPO has a list of health care providers called a provider network. This network offers every imaginable type of health care service including doctors, specialists, pharmacies, hospitals, labs, x-ray facilities, speech therapists, home oxygen, and more.

    In an EPO health plan, you can only get health care 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.

    It’s ultimately your responsibility to know which providers are in-network with your EPO. For example, you can’t assume that, just because a lab is down the hall from your EPO doctor’s office, that lab is in-network with your EPO. You have to check. Likewise, don’t assume that the imaging facility that did your mammogram last year is still in-network with your EPO this year. Provider networks change. If you make that assumption and you’re wrong, you’ll have to pay the entire mammogram bill yourself.

    There are three exceptions to the in-network requirement:
    1. The EPO doesn’t have an in-network provider for the specialty service you need. If it happens to you, pre-arrange the out-of-network specialty care with the EPO—keep your EPO in the loop.
    2. 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 physician on a case-by-case basis.
    3. True emergencies. If you’re having a stroke, heart attack, or other true emergency, you should go to the nearest emergency room whether or not it’s in-network with your EPO. Most EPOs will cover the cost of emergency care received at the nearest out-of-network facility as though it was in-network care. However, if you need to be admitted to the hospital from the ER, your EPO may ask the out-of-network ER to transfer you to an in-network hospital for admission.
  • You don’t have to have a primary care physician.
    Your EPO health plan won’t require you to have a primary care physician, although getting a PCP is still a good idea.
     
  • You don’t have to get a referral to see a specialist.
    Neither will your EPO require you to get a referral 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.
     
  • You’re required to get pre-authorization for expensive services.
    Your EPO will require you to get permission from it for some health care services before you’re allowed to get the care. If a particular service requires pre-authorization and you don’t get it, your EPO can refuse to pay.

    Pre-authorization helps your EPO keep costs down by making sure you really need the services you get. In plans like HMOs that require you to have a primary care physician, your PCP is responsible for making sure you really need the services you get. Since your EPO doesn’t require you to have a PCP, it uses pre-authorization as a mechanism to reach the same goal: the EPO only pays for things that are truly medically necessary.

    EPO plans differ as to what types of services must be pre-authorized. Most require pre-authorization for things like MRI and CT scans, expensive prescription drugs, surgeries, hospitalizations, and medical equipment like home oxygen. Your EPO’s Summary of Benefits and Coverage should tell you more about the pre-authorization requirement, but you should suspect that any expensive service will need to be pre-authorized.

    Although your doctor 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 doctor’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 health care provider bills your EPO health plan directly for the care you receive. You’ll just be responsible for paying your deductible, copayment, and coinsurance.

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. To learn more about how EPOs compare to HMOs and PPOs, check out “EPO Health Insurance—How It Compares to HMOs & PPOs.”

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