A Consumer Report survey reported forty-four percent of consumers who bought an Affordable Care Act (ACA) or Obamacare plan for the first time in 2015 said they did not know the configuration associated with their plan.1 Consumers need to understand the provider network for their plan to avoid a medical or financial disaster. Enrollees who select a plan with a provider network that does not include their preferred provider will face having to choose another healthcare provider or paying high out-of-network costs. This is especially relevant considering the majority almost fifty percent of Obamacare plans have a narrow provider network.2 Consumers enrolling in a plan with a narrow network must be informed about the pros and cons associated with the plan and how the plan work to protect themselves.
The first thing consumers need to understand when learning the ins and outs of how a narrow network impacts them is to understand what a network is. A healthcare network is a limited number of healthcare providers who have negotiated a contract with an insurer for rates for medical services. McKinsey & Company define a narrow network as one that "provides an enrollee access to less than seventy percent of hospitals in a rating area.3
Insurance companies employ narrow networks to trim enrollee costs in an effort to be competitive. In exchange for providing enrollees lower premium costs the insurer trims costs by contracting with a network of providers who offer the insurer lucrative rates for medical services. Premiums for plans with a narrow network are on average seventeen percent less than premiums for plans with a broad provider network.4 Another important factor consumers must consider when choosing a plan is the cost of the plan such as deductibles, out-of-pocket cost, co-insurance, and co-pays.5 Consumers must not let premium cost alone sway their decision when selecting a health plan, they need to be aware of the cost of associated with plan restrictions and how these restrictions can affect their healthcare and out-of-pockets costs.
Enrollees in plans with a narrow network must stay within the network for medical care to benefit fully from its cost savings. The risk of seeking out-of-network care can increase if the enrollee develops a medical condition where the best care is not available within their network. Some plans offer a cost-sharing agreement for seeing out-of-network providers; this is an important factor when choosing a health plan. The following examples show two common health plan models and their respective restrictions for out-of-network coverage.
The public Marketplace for insurance plans will give you access to provider directories associated with each plan. The ACA mandates that an insurance company provides consumers with an up-to-date directory of providers associated with a plan that is accessible via the website on which the plan is listed.8 Consumers should view the provider directory before purchasing a Marketplace plan to ensure they will have access to the providers they prefer. Not researching the provider network could severely limit an enrollee's access to affordable healthcare.
Plans with a narrow provider network can significantly reduce the cost of monthly premiums but they can also significantly limit access to healthcare providers. Enrollees in a plan with a narrow network might find they have to go out-of-network for various reason such as a serious disease where there is no in-network provider who specializes in the disease.
Some Marketplace plans offer limited access to out-of-network specialists. Harvard T.H. Chan School of Public Health researchers examined 135 silver level plans sold in thirty-four states on HealthCare.gov. Researchers found that fifteen percent of the plans did not have a physician in at least on specialty.9 This could be a serious problem for an enrollee with a complex medical condition. Enrollees must carefully research a health plan provider directory to make sure they have adequate access to specialists before selecting a health plan.
Another issue associated with plans with a narrow provider network is the possibility of developing a serious medical condition in the future that plan's provider network does not include a doctor specializing in the disease. If their plan does not include an in-network specialist the plan enrollee may be faced with high out-of-pocket costs to receive expert care.
Another problem with narrow provider networks is enrollees receive "surprise" bills for medical services from out-of-network providers. This can happen if for instance a patient undergoes a treatment such as surgery and the anesthesiologist is an out-of-network provider. Even though the surgeon and hospital is in-network, it does not guarantee all doctors within the hospital are in-net-work. Before undergoing any treatments that require other healthcare providers, ask if everyone is in your network to avoid "surprise" bills. According to a survey from Consumer Reports conducted in 2015, "thirty percent of privately insured Americans have received a surprise bill in the last two years."10
Generally insurance companies that limit patients to in-network healthcare providers are only required to pay out-of-network charges in the case of an emergency or if prior authorization is received for out-of-network care. The ACA requires insurers to treat patient cost sharing as it would for in-network charges. Patients who seek out-of-network care must complete or have the doctor complete an application requesting authorization of out-of-network medical services. While it may be in the best interest of the patient to get out-of-network care, it is in the insurer's best economic interest to direct patients to in-network providers.
For cases that do not qualify as an emergency or where preauthorization has not been received patients would be responsible for paying all of the out-of-network charges. For example, HMO plans usually have no out-of-network cost sharing agreements or no out-of-pocket maximum for out-of-network healthcare or providers.
The prices for out-of-network medical services in 2013-2014 were on average thirty percent higher than the average Medicare rates for ninety-seven common medical procedures, according to a study conducted by the AHIP Center for Policy and Research.11 For some procedures the difference in price between Medicare and out-of-network care was substantial. For example the average out-of-network fee for back disc surgery was $9,426 compared to the Medicare charge of $1,004 for the same back surgery.12 The out-of-network fee was over 938 percent higher than the corresponding Medicare charge.
It is quite common for patients to go out-of-network for healthcare. Consumers should not think the sample scenarios as extreme examples. The AHIP Center for Policy and Research study compared out-of-network and Medicare costs for ninety-seven medical procedures by analyzing 18 billion health claims. AHIP Center for Policy and Research estimated the out-of-network cost for the ninety-seven procedures alone was $3.2 billion.13 The national average cost for out-of-network is substantial and consumers should be informed and protect themselves from accruing out-of-network charges.
While it is true more than half of Obamacare plans do not have out-of-network coverage,14 term health plans sold through NationsHealthInsurance.com have a broad range of network provider coverage guaranteeing enrollees will have access to quality medical services. Term health plans are also considerably less expensive than an unsubsidized Obamacare premiums for plans offered on the Marketplace exchanges. When compared to the 2016 average cost for an Obamacare bronze level plan for men and women 30, 40, and 50 years of age, term health plan premiums cost twenty-five percent less. Savings increase for younger individuals without pre-existing conditions. For a healthy 30 year old male, a term health premium cost almost fifty-five percent less than an Obamacare bronze level plan.15
Taking into account the number of ACA insurance plans with narrow provider networks consumers should be informed and research plans and provider directories before enrolling in a plan to make certain that the plan does not leave them at risk for high out-of network charges.
Consumers who are looking for broad coverage might be served enrolling in a term health plan. At NationsHealthInsurance.com 100% of term health plans sold have out-of-network coverage. Enrollees in any of these plans may rest assured that will be able to access high quality providers without incurring high out-of-network charges.
It should be noted that unlike Affordable Care Act health plans, term health insurance does not cover pre-existing medical conditions.