HMO-Like Plans Make Comeback In Online Health Care Insurance Markets

Health Care Insurance: Competing On Price

To stand out from competitors, some plans may choose to offer the lowest possible rates, and would “narrow their networks” to do so, says Chet Burrell, CEO of insurer CareFirst in Maryland.  He acknowledged that narrow networks could be “a subtle but powerful way” to discourage less-than-healthy applicants. “The question will be what degree of tolerance will a state have to permit narrow networks?”

State rules on what makes an adequate health care insurance network vary.

No one can be refused health care insurance for a pre-existing condition.

No one can be refused health care insurance for a pre-existing condition.

Some states, including California, specify that specialists must be available within a certain driving time or distance. Others simply say insurers must have sufficient numbers of providers.  Some states don’t have any requirements.

“State rules are very, very loose,” says Weis at Quest, who says states should consider adopting the rules that now apply to Medicare Advantage, the private market alternative to Medicare.

In that program, the federal government requires networks to include primary care physicians and more than 25 types of specialists, and sets county-level requirements on both the minimum number of doctors required in each category and how far patients might have to travel to see one.

Even though state rules vary, regulators say plans that are too skimpy will be called out by regulators, consumers or both.

“We will look very closely at how plans put their packages together,” says Sandy Praeger, the elected insurance commissioner in Kansas.

“If you have a crummy network, no one will buy the plan,” says consultant Robert Laszewski, a former health care insurance executive, adding the law also includes programs that financially reward insurers that get a large share of sicker patients and penalize those that get a healthier and more profitable bunch.

Many health care insurance policies that currently offer a limited network of doctors and hospitals generally allow patients to go to out-of-network providers, with whom they do not have negotiated prices. But patients who seek such care face significant co-payments, which often start at 30% of the bill and can go as high as 50%.

It is often hard for consumers to figure out how much they might be charged if they go out of network, says Lynn Quincy, senior policy analyst at Consumers Union, publisher of Consumer Reports magazine.  In addition to meeting separate annual deductibles for out-of-network care, patients can be “balance-billed” by doctors or hospitals for the difference between what the insurer pays them and their total charges.

That doesn’t change under the federal health care law, so consumers could be left on the hook for tens of thousands of dollars.

“There’s no escaping that we’re going to see” insurance policies that include networks both wide and narrow, says Quincy. “That can be OK if there are much better tools to reveal to consumers how adequate those networks are and how much it might cost to go outside of them.”

This story was produced by Kaiser Health News in collaboration with USAToday

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