With Obamacare Coming, Why Should You Understand Networks?


Supplemental InsuranceLast week I listened to an individual complain about his health insurance.  He had suffered a minor accident that needed medical treatment.

Like a good shopper, since it was not life threatening, he had called his local hospital to see how much it would cost to go to the Emergency Room.  With his health insurance it was only going to cost him a nominal ER co-pay.

However, since there was an urgent care service closer and he was in pain, he elected to go to the urgent care center rather than the Emergency Room.

Here is the problem.  The local hospital is within the insurance company’s provider network.  If he had gone to the local emergency room, even though the total bill from the hospital and doctor would have been more than the urgent care center, the amount that he has to pay out of his income would have been less.

Since he elected to go to an urgent care center that was not in his insurance company’s network, the total amount that he had to pay was much higher.

Rather than paying less than $250 in E.R. and doctor bills to get a couple of stitches, he had to pay over $900.  The immediate pain in his cut finger was replaced with a delayed pain in his wallet a couple of months later when he got the bill.

Being a staunch Democrat, he is convinced that once all of America is on the Obamacare plans, this will never happen.

As an American, I am convinced that he has the freedom to his own political opinions.  However, his conviction that this health care disaster cannot be repeated is based on political spin; not on fact.

It shows that he does not understand how health insurance in America works.

WHAT IS A NETWORK

Both PPO plans and the Essential Benefit Plans rely on the principle of “networks.”  The bigger the network is, the less health care costs will be.

Before an insurance company, either in or out of the new health insurance exchanges, sets a premium, they negotiate with medical providers in each geographic area.  Those providers who are willing to limit their fees contract with the insurance companies.  When someone with that type of insurance receives health care, they will only be charged the contracted rate regardless of whether they bought their health insurance through a public health insurance exchange or through an insurance agent.

However, there is nothing in Obamacare that requires hospitals, doctors or urgent care centers to join a network.  Medical providers who do not agree to the limits in an insurance company’s network are free to charge whatever amount they want.

That principle will be just as true in January, 2014 as it is in July, 2013.

WHAT IS YOUR RESPONSIBILITY

Just because you choose to buy your health insurance through one of the new health insurance exchanges this fall and winter, don’t think you will be relieved of your responsibility to read and understand your policy.

Some, (rural areas,) of the nation do not have enough medical providers to create health insurance networks.  (I have read of problems in Mississippi, Iowa and South Dakota.)  If you live in an area like that, you have a problem.  Your health care providers can charge whatever they want.  Your only option will be to pay whatever the insurance companies in your area want to charge.

(I recommend that you shop for health insurance outside of the new health insurance exchanges in order to get the best deal available.  You will not be eligible for federal “subsidy” money but you may be able to find something that fits within your budget.)

Fortunately, I live, and work, just outside a major metropolitan area.  Houston, TX is the 4th largest city in the nation.  Health care is economically second only to energy.  At the risk of sounding like Tom Sawyer or Huck Finn, “You can’t swing a dead cat without hitting a” doctor, nurse or hospital.  The networks where I live are huge.

In fact there are so many doctors and hospitals that are in insurance company’s networks that I am forced to be reminded, occasionally, that not all Americans have the choices I do.

In the case I described earlier, the individual was just unlucky.  Although he had called a network hospital, he assumed that all health care providers are the same.  He found out, the hard way, that they are not.

WHAT CAN YOU DO?

While you are healthy, take the time to find out if your health care provider is in, or out, of your insurance company’s network.  Also, make certain that you verify your provider’s continued participation before you get any treatment.  Know where you would go for health care in the event of an accident before you need it.  It is probably worth the extra time it takes to drive to a network provider than to an out-of-network urgent care center.

However, if you suffer a major accident, the closest urgent care center is probably just fine.  Most insurance companies will pay benefits at the network rate for “emergency” medical treatment.  However, the term “emergency” is not standardized.  Read your policy to determine what constitutes an “emergency.”

Many insurance companies define an “emergency” to be something that is life-threatening only.  A cut finger needing stitches is important but not life-threatening.  Since it is not an emergency, although the urgent care center’s charges are less than the E.R., the insurance company will pay significantly less at an out-of-network urgent care center than if he had gone to an in-network E.R.

CAVEAT

Just be aware that in many hospitals the doctor who is on-call may, or may not, be an employee of the hospital.  While the hospital may be in-network, the doctor who treats you may have elected to remain outside of the network.  Don’t be surprised if you get a bill from the hospital for the network price and a different one from the doctor with his out-of-network fees.

Tim Barnes, CLU can help you if you have questions about health insurance this fall if you live in TX.  Use the communication box to the left to express your concerns.

Alternatives 2

Advertisements

One thought on “With Obamacare Coming, Why Should You Understand Networks?

  1. Most PPOs and HMOs define “emergency” a bit more broadly than simply life-threatening… for example, if you have a broken arm, and no means of transportation… you are typically directed to go to the nearest hospital.

    The real concern is that many (if not most) insurance exchanges come October 1, will not have published provider networks. Those are “still being determined” as one exchange administrator told me.

    This puts people in a tough spot – sign up for health insurance under the exchange early, but by blind as to provider networks… or, wait and risk an insurer seeing too-high demand, and pulling the plug, limiting your choices (if any are remaining at that point).

    Most of this will be sorted out by 2015 and the second open enrollment… assuming it all doesn’t topple over.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s