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Features of Private Payer and Cdhp

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Assignment: Features of Private Payer and CDHP


Preferred provider organizations (PPOs) are the most popular type of private

plan, followed by health maintenance organizations (HMOs), especially the

point-of-service (POS) variety. In addition, Consumer-driven health plans (CDHP) that combine

a high-deductible health plan with a funding option of some type are rapidly

growing in popularity among both employers and employees Furthermore, few employees choose

indemnity plans because they would have to pay more. (Valerius, Bayes, Newby, & Seggern, 2008).

PPO stands for preferred provider organization and is a managed care organization of medical

doctors, hospitals, and other health care providers who have a binding agreement with an insurer or a

third-party administrator, which usually pay participating providers based on a discount from their

physician fee schedules, called discounted fee-for-service (Valerius et al, 2008). Providers in the PPO

will provide the insured members of the group a substantial discount below their regularly-charged

rates. This arrangement helps ensure that the insurer will be billed at a reduced rate when its insured

utilize the services of the preferred provider. Additionally, those who have PPOs have more flexibility

to choose a primary care doctor of their own choice, as well as being able to go to a specialist without

first having to get a referral from their primary care physician. PPO members also may be fully or

partially reimbursed if they use a doctor that is not listed in the PPO 'network.


Health Maintenance Organization (HMO) is licensed by the state, which has lower costs, but the

HMO has the most strict guidelines and a limited choice of providers. Furthermore, members are

assigned to primary care physicians and must use network providers to be covered, except in

emergencies, which also uses an expanded network that had contracted work with the HMO, which

may consist of medical specialists, dentists, psychotherapists, physical therapists, nutritionists,

educators, and pharmacies and hospitals. HMOs were originally designed to cover all basic services for

an annual premium and visit copayments, which were called first-dollar coverage, as no deductible

was required and patients didnot make out-of-pocket payments (Valerius et al, 2008).


A group HMO network have contracts with more than one physician group, which some plans, the

members can receive medical services in their own facilities from providers who work only for that

HMO. In others plans, members visit the providers' facilities, and the providers can also treat

nonmember patients. Moreover, the practices under contract are paid a per member per month for each

subscriber assigned to primary care services (Valerius et al, 2008). However, over the years and

because of expenses, HMOs may apply deductibles to family coverage and employer-sponsored

HMOs, which also are replacing copayments with coinsurance for some benefits.


An IPA is an Independent Practice Association of medical doctors, such as primary care physicians

and specialists and other health care professionals that have contracted with most insurance plans, as

these doctors practice independently and usually see nonmember patients as well. In addition,

physicians contract together to provide care for members, which pays negotiated fees for medical

services to the IPA, which also, providers may join more than one IPA (Valerius et al, 2008). Also, the

IPA in turn pays its physician members by a participation fee.


A POS Insurance Plan is an insurance plan that allows the insured person to choose providers or

specialists with the POS plan's network s referred by their primary care physician but the member can

also refer themselves to a provider outside the network. POS members may choose from a primary or

secondary network. Furthermore, if a doctor refers a patient out of the network, usually the plan pays

all or most of the bill. If a POS member refers themselves to doctors or specialists outside the network,

they will have to pay a predetermined amount of coinsurance.



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