What is the difference between an HMO and an EPO?
From the consumer’s perspective, there is really no difference between the two. HMO stands for health maintenance organization while EPO stands for exclusive provider organization. The general premise of HMO’s and EPO’s is the same in that members must use the providers in the plan’s network to receive benefits under the plan. The technical difference is that generally an HMO is an insured product (the insurance company pays the claim costs) whereas an EPO is generally a self-insured product (the employer pays the claim costs). Since the City of Scottsdale’s plan is self-insured, it is technically called an EPO.
A health maintenance organization (HMO) is a type of Managed Care Organization (MCO) that provides a form of health insurance coverage in the United States and Switzerland that is fulfilled through hospitals, doctors, and other providers with which the HMO has a contract. Unlike traditional indemnity insurance, care provided in an HMO generally follows a set of care guidelines provided through the HMO’s network of providers. Under this model, providers contract with an HMO to receive more patients and in return usually agree to provide services at a discount. This arrangement allows the HMO to charge a lower monthly premium, which is an advantage over indemnity insurance, provided that its members are willing to abide by the additional restrictions. In addition to using their contracts with providers for services at a lower price, HMOs hope to gain an advantage over every day insurance plans by managing their patients’ health care and reducing unnecessary services. To achieve this, mos
