In real estate location is key. In Health Insurance, for some, it’s the provider network. Whether a doctor or hospital is contracted with a carrier has a direct link to the level of your out-of-pocket costs and your peace of mind. With most health plans, providers are either contracted (in-network) or non-contracted (out-of-network).
In an HMO plan, seeing an out-of-network doctor usually means zero benefits. For PPO plans, you can receive benefits when seeing any doctor, but if you see an out-of-network provider it can result in much higher out-of-pocket costs. That’s because in-network PPO providers have agreed to accept the carriers’ discounted fee schedule for services and you can’t be billed the difference. We are fortunate in California to have multiple carriers offering PPO plans with statewide provider networks that include a large percentage of doctors, medical centers, and hospitals. But will that change with Health Care reform? It’s likely.
Reform will bring with it expanded benefits, standardized plan designs, and greater access to care for more people. For insurance carriers, the challenge will be to offer plans that meet these requirements yet be competitively priced in the new marketplace. Remember, these carriers have a number of new taxes to digest (and pass along to the consumer). One area carriers can control costs is in their contracts with providers. Offering lower fee schedules to providers can directly impact insurance premiums. But squeezing providers with lower fees could result in fewer doctors and “skinnier” networks. It is a delicate balance and, to remain competitive, carriers may sacrifice provider network size over lower premiums.
Covered California, the name of the new health care marketplace in California, will have 19 pricing regions. As a result, the major PPO carriers (Blue Shield, Blue Cross, and HealthNet) may establish a more regional approach to their provider networks. Consumers will have to re-examine their priorities when evaluating plan options in the marketplace. Size and quality of a carrier’s provider network will be an important factor for many. And for some, it will be the most important.
Information on premiums, plans, and provider networks is due in early September. Stand by for more!