Stuck out-of-network and vulnerable
Warning: Opting Out Of Your Insurance Plan's Provider Network Is Risky
By Michelle Andrews
Kaiser Health News, March 18, 2014
Many plans sold on the health insurance marketplaces offer a tradeoff: lower premiums in exchange for limited networks of providers. But consumers who opt for a narrow network plan with the idea that they’ll go out of network when necessary may be taking a big financial risk.
The health law generally places limits on how much consumers can be required to pay out of pocket for medical care (not including premiums). In 2014, the limit for an individual plan is $6,350 and for a family plan, $12,700. But those limits apply only to care provided by doctors and hospitals in a plan’s provider network. There may be a separate out-of-pocket maximum for services provided out of network in marketplace plans, or no cap at all.
Similarly, the health law requires that preventive care such as vaccines, cancer screenings and annual checkups be covered at no cost to consumers in most health plans. If someone uses an out-of-network provider, however, they can be charged.
Going out of network opens the door to higher costs in other ways as well. Plans may require patients to pay a higher copayment or coinsurance for an out-of-network provider. In addition, since the doctors, hospitals and other providers are not under contract with the insurance company, in many states those providers may bill patients for any charges not covered by the insurance, a practice known as “balance billing.” The contracts signed by providers who join plan networks generally contain provisions that prohibit them from balance billing enrollees.
Plans sold on the marketplace are divided into four levels based on the amount of consumer cost sharing required. On average, a bronze plan pays for 60 percent of covered medical services, a silver plan pays for 70 percent, a gold plan, 80 percent, and a platinum plan, 90 percent. But those percentages don’t take any out-of-network care into account.
A McKinsey & Co. analysis of 120 silver-level exchange plans found that 70 percent were narrow network plans, in which at least 30 percent of the area’s largest hospitals are not in the plan, or ultra narrow network plans, in which that number grows to at least 70 percent.
Narrow networks can be a particular problem in HMO-style plans that don’t cover any out-of-network care except for emergency services. According to the analysis by Breakaway Policy Strategies, roughly a third of mid-level silver plans are of this type, typically leaving consumers on the hook for the entire bill if they get care from an out-of-network provider.
The health law does provide protection for consumers when they receive emergency care from a hospital that’s not in their provider’s network. In such instances, health plans can’t charge consumers higher coinsurance or copayments.
However, patients placed on observation status or admitted to the out-of-network hospital from the emergency department are no longer shielded from higher out-of-pocket costs.
“Once the patient is stabilized, the patient will be responsible for whatever the insurer doesn’t pay for that observation or admittance,” says Jeffrey Bettinger, an emergency physician who is chairman of the reimbursement committee of the American College of Emergency Physicians.
Whichever type of plan they choose, the onus is on consumers to dig into the details and make sure they understand what they’re signing up for. There’s a tremendous amount of variability in exchange plans, even among silver level plans, says Richard Smith, executive vice president at Breakaway Policy Strategies.
“I don’t see a lot of standardization,” he says. “Consumers need to be really cognizant. There are design features of these plans that consumers need to be aware of.”
By Don McCanne
Most people who have been paying any attention at all are quite aware that health plans inside and outside of the exchanges limit coverage to physicians and hospitals within their contracted networks. Although some plans may also offer limited coverage outside of the networks, it is less clear as to the extent and adequacy of that coverage. This article helps to clarify that issue by showing how muddled the coverage is.
Some of the traps include care provided outside of HMOs, care provided after an emergency patient is stabilized, free preventive services that may not be free outside of the network, services provided within network that are not benefits of the specific plan selected, and so forth. What is particularly treacherous is that, not only do you usually have to pay in full for these services, but your payments may not apply to your maximum out-of-pocket expenses, which can be unlimited out-of-network. The ACA promise that out-of-pocket expenses will be capped for the year ($6,350 for an individual and $12,700 for a family) comes from the same book of promises that gave us “you can keep your plan if you like it.” It is possible to end up with expenses over six figures. That is quite a whack for the person who was trying to do the right thing by buying a qualified insurance plan.
The precise out-of-network coverage depends on the specifications of the plan selected, and there are very few standards with which the plans must comply. So how do you select the right plan?
When people purchase their plans, they usually look first at the premium. Then they look at the deductibles and then the copayments or coinsurance. Usually, when assisted by a plan navigator or equivalent, they will also look at the tax credits for the premiums and the subsidies for cost sharing. Since many benefit from these they often select a silver plan because that is the only tier that includes cost-sharing subsidies.
The next step is to check the list of providers to see if your physician(s) or hospital(s) are on the list. This is where it becomes more tricky since those lists are often difficult to access, and they can be quite unreliable. Even physicians can be confused since they may be included on an insurer’s plan outside of the exchanges, but excluded from the exchange plans, and yet they may not be aware of the exclusion.
Finally, just try to find out the precise rules for coverage of care obtained outside of the network. Since there are very few standards, it is important to know this. The various insurers may approach such charges quite differently. You could end up with only modest additional expenses, but it is not too difficult imagining a six-figure bill when you are admitted to an out-of-network hospital. The insurer may cover the charges in the emergency room, but once the stabilized patient is admitted, she may well be on her own for all additional charges.
Think of how administratively complex the private insurers have already made our system. Then think of the administrative excesses that arise just from handling the muddled out-of-network care. The insurers are forcing upon us even more of their primary product - administrative services - while evading the very purpose of health care coverage by not paying for medical services that the patient needs.
If we had a single payer national health program with first dollar coverage (like many other nations with much lower health care costs) then this out-of-network nonsense would go away. What is really perplexing is why haven’t our people demanded this before now? Don’t facts matter?
In fairness, when we, as experts, think of how much effort we have to put in just to understand these issues, it is no wonder the the insurers and the rest of the medical-industrial complex have been so successful in bamboozling the public at large. We can use the political process to overcome this, but it would require a massive effort. After a couple of decades of working on this, I don’t see it happening. Prove me wrong.