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What is an exclusive provider organization (EPO)?

An exclusive provider organization (EPO) is another type of managed health-care system. An EPO is basically a preferred provider organization (PPO) with one important difference: No coverage is provided for non-network care. To an EPO member, then, the EPO seems to operate like a health maintenance organization (HMO). However, contractual issues, compensation arrangements, provider selection, and utilization management controls are handled like a PPO.

What are the advantages of EPO coverage?

No “gatekeeper” standing between you and your specialist

HMO members generally must choose a primary care physician who provides general medical care and who must be consulted before seeking care from another doctor or specialist. EPO members have no such restriction.

Emergency treatment generally covered regardless of provider

As explained, EPOs generally do not pay for services performed by providers outside of the network. However, this rule is generally waived for emergency treatment. Most EPOs give full coverage for emergency treatment regardless of where it is performed and who provides it, as long as the accident or illness meets the plan’s definition of an emergency, although the term emergency is defined by law in many states.

Annual out-of-pocket costs for network care are generally limited

As in a PPO, health-care costs paid out of your own pocket for network care (e.g., deductibles and co-payments) are typically limited. However, since non-network care is not covered, there is no limit on your out-of-pocket costs if you choose to go outside of the network.

What are the disadvantages of EPO coverage?

No coverage for out-of-network care

As mentioned, there is strong financial incentive to use EPO network physicians. For example, members may receive 90 percent reimbursement for care obtained from network physicians but no coverage for treatment provided by non-network doctors. Thus, if your long-time family doctor is outside of the EPO network, you may choose to continue seeing him or her, but you will have to pay for the treatment yourself.

Deductible must generally be met before insurance coverage begins

In most cases, EPO coverage does not begin until you have met your annual deductible. In other words, the deductible comes out of your own pocket. Once your expenses exceed the amount of the deductible, insurance coverage begins. This deductible amount is in addition to any co-payment.

How do you know you will receive quality care from EPO physicians?

Most EPOs go through an extensive process to review the credentials of providers who have applied for admission to the EPO network. Generally, only those providers who meet the EPO’s established criteria are admitted to the network. This process is known as “credentialing.” After being admitted to the EPO network, periodic re-credentialing may be performed to ensure physicians continue to provide high-quality care. Aspects reviewed in the credentialing process may include the following:

Qualifications

In addition to being licensed, EPOs may require physicians to be board certified (meaning the physician has passed a specialization examination given by the governing board of that particular specialty). EPOs may require hospitals to be Medicare certified or accredited by the Joint Commission of Accredited Hospitals (JCAH) or a similar organization.

Malpractice history

EPOs may investigate malpractice data to screen out providers who are consistently found to be negligent or incompetent and those who frequently lose malpractice lawsuits.

Disciplinary actions by regulatory authorities

The medical profession is under the supervision of numerous government agencies, licensing boards, and review commissions. By checking into the records of these organizations, EPOs can determine whether applicant providers have been reprimanded or subjected to disciplinary action.

Practice patterns/provider profiling

Treatment and utilization data can be analyzed to determine whether a provider practices in a cost-effective manner.

Patient outcomes

Hospital readmission rates and complication rates can be analyzed to determine whether the provider treats patients successfully.

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