Guide To Health Insurance.org

What is an Exclusive Provider Organization (EPO)?

An Exclusive Provider Organization (EPO) is a network of individual medical care providers, or groups of medical care providers, who have entered into written agreements with an insurer to provide health insurance to subscribers. In EPO, medical care providers enter a mutually beneficial relationship with an insurer. The insurer reimburses an insured subscriber only if the medical expenses are derived from the designated network of medical care providers. The established network of medical care providers in turn provide subscribed patients medical services at significantly lower rates than what would have been under normal circumstances. In exchange for reduced rates of medical services, medical care providers get a steady stream of business.

An EPO earns additional money by charging an access fee to the insurer for use of the network. It also negotiates with the medical care providers of the organization in order to set fee schedules and help resolve altercations between the insurer and medical care providers. Sometimes EPOs even contract with one another to strengthen their businesses and positions in a certain geographic area.

The beneficial relationship between medical care providers and the insurer often rubs off of the insured subscriber because lower rates of medical services means lower rates of increase in monthly premiums. Although a good deal, the downside of EPO is that it can be quite restrictive. As a member of an EPO, you can use the doctors and hospitals within the EPO network, but cannot go outside of the network for care. Suppose you go to a hospital outside of the network in the case of an emergency, you may have to pay you medical bills partially or completely out of the pocket.

Exclusive Provider Organization (EPO) vs. Preferred Provider Organization (PPO)

A Preferred Provider Organization (PPO) is a healthcare benefit arrangement that is similar to the EPO in structure, administration, and operation. Unlike EPO members, however, PPO members are reimbursed for using medical care providers outside of the designated doctors and hospitals. Understandably, PPO members are reimbursed at a reduced rate that may include higher deductibles, co-payments, lower reimbursement percentages, or a combination of those disadvantages. On the other hand, EPO members do not receive any reimbursement or benefit if they choose to visit medical care providers outside of the designated doctors and hospitals within the established network. Some, but not all, EPOs allow partial reimbursement outside of the network in emergency cases.