What Type Of Health Insurance Is Right?

bethesda-naval-hospital-80363_1280Health insurance is more complicated than the press or politicians have implied.  It is a contract and both parties have responsibilities.

The insurance company has the responsibility to help you pay your medical bills.   However, their responsibility can be nullified if you do not fulfill your responsibilities.

MANGED CARE PLANS

Most of the Affordable Care Act plans sold in the Individual Market are “Managed Care” type of plans.  They are either Health Maintenance Organizations (HMO) or Exclusive Provider Organizations (EPO).   That means that although the insurance company wants to help you, the emphasis is on the most economical way to “manage” your health care.  Yes, they want to get you back to an acceptably healthy lifestyle but do it in an affordable way.

In order to keep control over costs, both plans can use a Primary Care Physician.  It is his/her job to monitor your health care to make certain that there are no duplications of your tests or treatment.  That doctor is typically a General Practitioner, Internist or OB-GYN.  In exchange for his/her monitoring activities, that doctor is typically paid a flat fee from the insurance company.  That is where the similarities between the two type of managed care plans differ.

HMO

The very first plan, that we know today as, “Health Insurance” was developed as a benefit for teachers in the Dallas, TX area in 1929.  It was an HMO designed to benefit teachers who had to use the services of a hospital.  A few years later the plan also included routine visits to a doctor.

Before that plan was established by Blue Cross, when people used the term, “Health Insurance” they were generally talking about what we know today as, “Disability Income” insurance that was designed to replace a portion of a workers income if he/she was not able to work because of a sickness or injury.

Originally, health insurance was not designed to solve doctor’s/hospital’s collections issues.  It was designed to make certain that an employee, and his/her family, was able to maintain their standard of living if the employee suffered an illness or injury.

While the purpose of health insurance has changed over the years, today’s HMO plans tend to work similar to how they worked in Dallas in 1929.

HMO plans not only require you to visit your Primary Care Physician before you are able to use a specialist and expect the insurance company to help with the bill, they also require you to use only the specialist that they refer you to.  If you elect to use any other specialist, than the one your PCP refers you to, you will have no help with your medical bills from the insurance company and it is likely that the specialist will charge you the higher rate that is reserved for patients without health insurance.

The same is true of hospitals.  If your coverage is with a HMO, you can only use the hospital that your PCP refers you to, if you want help with your medical bills from the hospital.

You can still elect to use a different hospital, if that is what you want.  However, unless you follow all of the rules that a HMO style plan has, you will have no health insurance.  In that case you will be personally responsible for any medical bills you incur.

EPO

Of all the health insurance types, the Exclusive Provider Organization (EPO) is probably the newest.

An EPO is similar to a HMO but it does have a significant difference.  Whereas the use of a Primary Care Physician (PCP) is mandatory in a HMO, it is optional in an EPO.  You can elect to have a single physician monitor your health care treatment or rely totally on the insurance company to manage your care.

Another major difference is that you do not need to have a referral from a PCP to see a specialist.  If you develop symptoms of an illness and want to go directly to a specialist, or you simply want a second opinion, as long as you use a provider who participates in the plan’s network, you can go directly to that provider.

Yes, there is a difference between the two type of contracts but there is a huge similarity between them that you, as an insured, need to pay attention to.  Neither HMO or EPO plans will help pay non-emergency health care obtained from a provider who does not participate in the HMO or EPO network.

Although the “Affordable Care Act” requires insurance companies to pay for health care obtained for emergencies, regardless of what hospital is used, it allows the insurance company, not you, to decide what is, and is not, an emergency.  You should make sure you read your policy, when you get it, to see what is, and is not, considered an emergency by your insurance company.

If you seek treatment from an ER for a condition that is more routine, you may, or may not, get any benefit from your insurance company.

If you use either one of these plans, and your PCP already participates in the plan’s network, or you are flexible with what providers you use, either one of these two type plans are just fine.  However, there is something you need to verify before you commit to either of these type of plans.

HMO and EPO networks tend to be very limited on the number of providers who accept the terms of those type of plans.  Before you commit to either type of plan, if you have the luxury of being a little selfish, verify that your doctor and preferred hospital are in the plan’s network.  If they are not, you could find that you paid for health insurance that will not be there when you need it.

Preferred Provider Organization

Preferred Provider Organizations (PPO), however are much different.  Like HMO and EPO plans they have a network.  Hence the word, “Organization” in their title,

However, if one makes a mistake and uses a doctor/hospital that is not in the plan’s network, the penalty is not nearly as great as it is with a HMO or EPO plan.  In that case the insurance company will still pay part of the healthcare bill.  Just not as much as they would have paid if one used a provider that was in the network.

Here is how a PPO plan works.  The first PPO plans started in the 1980s as a marketing gimmick.  Doctors met up with executives from large companies.  They agreed to discount their fees for employees who used their services.  That meant that people who were not employed by that company would pay a doctor more than people employed by the sponsoring company for the same treatment.

The list of doctors who participated in the arrangement was called a, “network”,

The insurance companies saw how effective the arrangement was and adopted the plan.  However, they made some tweaks.  Today hospitals are included in the networks.

Now instead of each employer having their own network, networks belong to insurance companies and any employer, regardless of size, is able to join a PPO with all of its benefits for their employees.

As the popularity of the PPO arrangement grew, insurance companies allowed those who had to buy their health insurance in the Individual market to join.

Doctors/Hospitals have a contractual arrangement with the insurance companies that affect members in two ways.

First, doctors/hospitals have contractually agreed to charging no more than a specific fee to members for health care.  (This leads to some confusion from members.  When a doctor/hospital submits a “claim” to the insurance company, they often submit a claim for what they would for a person with no health insurance but the claim department at the insurance company only sends them the amount they agreed to.  The confusion happens when members think that they will be billed for the difference.  That is NOT supposed to happen.  If you have already paid your deductibles and/or co-insurance, you will not need to pay anything else.  You should get an “Explanation of Benefits” (EOB) form in the mail every time a claim is submitted by your doctor/hospital.  That form will tell you how much your insurance company paid for you and how much, if any, you still owe.

Second, doctors/hospitals who wish to participate in the plan’s network have agreed to do your insurance claim paper-work for you.  Just be careful that some doctors/hospitals who are NOT in a plan’s network can offer to do that paper-work for you, as well.

You will still get an EOB in the mail from your insurance company after they have paid their portion of the bill, but the claim will have been processed using the “Out-of-network” benefits.  You could end up owing a significantly larger sum than if you had used a provider that was in the PPO network.

Sadly, if you want a PPO plan today, and buy your health insurance in the Individual Market, you will need to obtain it outside of the Federal Marketplace and be able to pass limited health related underwriting.  (There is a link, for Texans to use, on the right-hand side of this blog.)

The last PPO that was available for Individuals/Families that was compliant with the Affordable Care Act, in my state, was sold during the last half of the Annual Enrollment Period for 2015.

PPO plans are still commonly available in the group market.  If you obtain your health insurance from an employer, the odds are good that you have PPO coverage.  Just do not assume that is the case.  Some employers have changed to HMO style plans, in recent years, since they tend to be less expensive.  If you want to be certain which type of plan you have, call the customer service number that is on your health insurance ID card and ask them.

Point Of Service

In the 60s and 70s the most popular type of insurance plan was called a Point of Service (POS) plan.  It was more similar to the PPO plan than it was to HMO or EPO plans.  The difference was that there were no “networks” with which to deal with.  As long as you used a provider who was licensed to practice medicine in your state, the insurance company would pay your claim according to the terms of your plan.

The POS was not a bad plan.  In fact, that model is still used by Original Medicare today with one minor upgrade.

Under the POS model, one would pay the doctor/hospital/pharmacy directly and then personally submit a claim to the insurance company for reimbursement.  Today there are three major differences that Medicare allows.

First, many doctor/hospitals will do your insurance claim for you and submit directly to Medicare to get their bill paid.  However, Medicare does not pay everything.  If there is a balance due after Medicare pays their portion, Medicare will submit your claim to your Medicare Supplement insurance company to pay the balance, if you have one.  If you do not have a Medicare Supplement policy, your doctor will bill you for the portion that Medicare does not pay.

Second, Medicare allows doctors to withdraw from their POS.  That is normally referred to as a doctor who does ” not accept Medicare.”  If you use a doctor who does not accept Medicare, you will need to be prepared to pay his/her entire fee.  You can still use that provider but don’t expect any help from Medicare with the bills.

Third, Medicare only pays for certain drugs obtained through a hospital pharmacy.  Most drugs are obtained through retail pharmacies.  Those drugs are not covered by the POS that is with Original Medicare.  You will need a Medicare D plan to cover prescription drugs from a retail pharmacy.

With the exception of Original Medicare, there are very few POS plans available today.  Most health insurance plans are PPO, EPO or HMO.

 

 

 

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