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What Are My Health Plan
Choices?
Choosing between health plans is not as easy as it once was.
Although there is no one "best" plan, there are some plans that will be
better than others for you and your family's health needs. Plans differ,
both in how much you have to pay and how easy it is to get the services
you need. Although no plan will pay for all the costs associated with your
medical care, some plans will cover more than others.
Almost all plans today have ways to reduce unnecessary use of health
care—and keep down the costs of health care, too. This may affect how
easily you get the care you want, but should not affect how easily
you get the care you need.
Plans change from year to year, so you should carefully consider each
plan, using the questions outlined in this booklet. If you get health
insurance where you work, you should start with your employee benefits
office. Its staff should be able to tell you what is covered under the
plans available. You can also call plans directly to ask questions.
Health insurance plans are usually described as either indemnity
(fee-for-service) or managed care. These types of plans differ in
important ways that are described below. With any health plan, however,
there is a basic premium, which is how much you or your employer pay,
usually monthly, to buy health insurance coverage. In addition, there are
often other payments you must make, which will vary by plan. In
considering any plan, you should try to figure out its total cost to you
and your family, especially if someone in the family has a chronic or
serious health condition.
Indemnity and managed care plans differ in their basic approach. Put
broadly, the major differences concern choice of providers, out-of-pocket
costs for covered services, and how bills are paid. Usually, indemnity
plans offer more choice of doctors (including specialists, such as
cardiologists and surgeons), hospitals, and other health care providers
than managed care plans. Indemnity plans pay their share of the costs of a
service only after they receive a bill.
Managed care plans have agreements with certain doctors, hospitals, and
health care providers to give a range of services to plan members at
reduced cost. In general, you will have less paperwork and lower
out-of-pocket costs if you select a managed care type plan and a broader
choice of health care providers if you select an indemnity-type plan.
Over time, the distinctions between these kinds of plans have begun to
blur as health plans compete for your business. Some indemnity plans offer
managed care-type options, and some managed care plans offer members the
opportunity to use providers who are "outside" the plan. This makes it
even more important for you to understand how your health plan works.
Besides indemnity plans, there are basically three types of managed
care plans: PPOs, HMOs, and POS plans.
Indemnity Plan
With an indemnity plan
(sometimes called fee-for-service), you can use any medical provider (such
as a doctor and hospital). You or they send the bill to the insurance
company, which pays part of it. Usually, you have a deductible—such as
$200—to pay each year before the insurer starts paying.
Once you meet the deductible, most indemnity plans pay a percentage of
what they consider the "Usual and Customary" charge for covered services.
The insurer generally pays 80 percent of the Usual and Customary costs and
you pay the other 20 percent, which is known as coinsurance. If the
provider charges more than the Usual and Customary rates, you will have to
pay both the coinsurance and the difference.
The plan will pay for charges for medical tests and prescriptions as
well as from doctors and hospitals. It may not pay for some preventive
care, like checkups.
Managed Care
Preferred Provider Organization (PPO). A PPO is a form of managed
care closest to an indemnity plan. A PPO has arrangements with doctors,
hospitals, and other providers of care who have agreed to accept lower
fees from the insurer for their services. As a result, your cost sharing
should be lower than if you go outside the network. In addition to the PPO
doctors making referrals, plan members can refer themselves to other
doctors, including ones outside the plan.
If you go to a doctor within the PPO network, you will pay a copayment
(a set amount you pay for certain services—say $10 for a doctor or $5 for
a prescription). Your coinsurance will be based on lower charges for PPO
members.
If you choose to go outside the network, you will have to meet the
deductible and pay coinsurance based on higher charges. In addition, you
may have to pay the difference between what the provider charges and what
the plan will pay.
Health Maintenance Organization (HMO). HMOs are the oldest form
of managed care plan. HMOs offer members a range of health benefits,
including preventive care, for a set monthly fee. There are many kinds of
HMOs. If doctors are employees of the health plan and you visit them at
central medical offices or clinics, it is a staff or group model HMO.
Other HMOs contract with physician groups or individual doctors who have
private offices. These are called individual practice associations (IPAs)
or networks.
HMOs will give you a list of doctors from which to choose a primary
care doctor. This doctor coordinates your care, which means that generally
you must contact him or her to be referred to a specialist.
With some HMOs, you will pay nothing when you visit doctors. With other
HMOs there may be a copayment, like $5 or $10, for various services.
If you belong to an HMO, the plan only covers the cost of charges for
doctors in that HMO. If you go outside the HMO, you will pay the bill.
This is not the case with point-of-service plans.
Point-of-Service (POS) Plan. Many HMOs offer an indemnity-type
option known as a POS plan. The primary care doctors in a POS plan usually
make referrals to other providers in the plan. But in a POS plan, members
can refer themselves outside the plan and still get some coverage.
If the doctor makes a referral out of the network, the plan pays all or
most of the bill. If you refer yourself to a provider outside the network
and the service is covered by the plan, you will have to pay coinsurance.
Your primary care doctor will serve as your regular doctor, managing
your care and working with you to make most of the medical decisions about
your care as a patient. In many plans, care by specialists is only paid
for if your are referred by your primary care doctor.
An HMO or a POS plan will provide you with a list of doctors from which
you will choose your primary care doctor (usually a family physician,
internists, obstetrician-gynecologist, or pedicatrician). This could mean
you might have to choose a new primary care doctor if your current one
does not belong to the plan.
PPOs allow members to use primary care doctors outside the PPO network
(at a higher cost). Indemnity plans allow any doctor to be used.
Courtesy: The Agency for Healthcare Research and Quality Web site
provides practical health care information, research findings, and data to
help consumers, health providers, health insurers, researchers, and
policymakers make informed decisions about health care issues.
Source: Agency For
Health Care Research and Quality
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