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Exclusive Provider Organization (EPO) describes the network of healthcare providers (doctors, hospitals and imaging services) that the health insurance plan is contracted to work with and is willing to compensate for your care. Under an EPO plan, the insurer will only provide cost-sharing when you use a health care provider that is inside your network. Any care you receive out of network will generally not be eligible for payments through the insurance company.
One exception when it comes to provider restrictions is in the event of an emergency. Insurers and regulators acknowledge that in instances where you need immediate care, consumers often don’t have a choice as to where they receive care. This is especially true when an ambulance simply takes you to the closest hospital.
In the standards set by the Affordable Care Act, insurance companies are required to treat out-of-network emergency care in the same way as in-network care. If you are in need of immediate medical attention (typically through the emergency room), your insurance plan will have the same cost-sharing structures for both in-network and out-of-network services. This may also apply if you are admitted into the hospital for inpatient care directly from the emergency room.
EPO vs. HMO
In this way, an EPO plan is in many ways similar to an HMO or Health Management Organization that also restricts you to an existing set of providers. The major difference however is that under an HMO, a policyholder is required to choose a primary care physician that acts as their first point of contact for all care. To visit a specialist or receive any other type of service you’ll be required to receive a referral. With the EPO plan, you’ll be able to self-refer and go see specialists directly without a referral.
This freedom comes with some tradeoffs. First, because you will be permitted to choose specialists and hospitals it is vital to check that the provider is in-network. The cost of out of network care will not be eligible for any of the cost-sharing mechanisms or out of pocket maximums provided by the insurer. One especially tricky situation is that some medical services may require multiple service providers, some of which may not be in-network. This can happen if you elect to have surgery in an in-network hospital for instance but one or more of the physicians involved in your care are actually not part of the network.
The second consequence is a cost-saving mechanism applied by insurance companies known as pre-authorization. While you're allowed to visit specialists and other service providers directly, the insurance company can require you to get prior approval before it is willing to pay for a procedure. This typically applies to high-cost services such as surgeries, MRIs and other high-cost items like specialty medications. By requiring consumers to get authorization before receiving such medical services, insurers help to reduce the amount of unnecessary care they would otherwise pay for.
It is the policyholder's responsibility to request prior approval before receiving these services. In cases where prior approval is not received before receiving such medical care, the consumer may be on the hook for the ensuing costs. For medically necessary services, your primary care physician (PCP) can usually be the one to help get approval.