1.5.10 Service Insurers
Service insurers technically do not provide insurance to their members. These organizations contract for and sell medical and hospital care services. Medical care services are provided in exchange for premiums paid.
One of the most well known service providers is Blue Cross/Blue Shield. Blue Cross provides hospital expense coverages such as room and board and miscellaneous expenses and Blue Shield covers surgical expenses and other medical service expenses performed by physicians.
Participants of the various available plans are known as subscribers. The term "subscriber" indicates the person or entity that has a health maintenance contract with the HMO, pays the fee and uses the services of the HMO.
The most familiar plans are HMO and PPO plans. We'll go into these briefly here as they will be elaborated on throughout the text of the course.
What is a health maintenance organization (HMO)?
What is a preferred provider organization (PPO)?
Health Maintenance Organizations
Health Maintenance Organizations (HMOs) retain a network of service providers (physicians, hospitals, facilities, etc.). Subscribers (members/insureds) pay a fixed periodic premium in advance of any treatment. HMOs require insureds to be assigned a primary care physician (PCP) who oversees the subscriber's main health care and can provide specialist referrals if necessary.
Most health issues also require an authorization through the insurance company before claims are paid. HMOs and Florida laws pertaining to HMO operations within the state are addressed in more depth later.
Preferred Provider Organizations
Preferred Provider Organizations (PPOs) are considered point of service (POS) companies. The PPO will contract with specific providers who will in turn provide discounts on health care services. Unlike HMOs, PPOs do not require insureds to have a PCP. PPOs require deductibles and coinsurance and provide monetary incentives for members to use the physicians who are on their approved provider list.
For instance, a typical coinsurance amount for a preferred provider visit is 80/20 (20% being the insured's responsibility). If the member goes out of the network to use a physician who is not in the PPO's network, the coinsurance may raise up to 60/40 (40% being the insured's responsibility).
