Insurers Limit Provider Choices On Obamacare Exchange
By Dr. James Palermo // August 18, 2013
CONSUMERS WILLING TO SACRIFICE PROVIDER CHOICE FOR LOWER PREMIUMS
ABOVE VIDEO: Humana defines both PPO and HMO plans, focusing on the many similarities of the two insurance plans, as well as some of the important differences, so that the consumer can select the best option to meet their and their family’s needs. Most offered plans on the federal exchange provided by the PPACA are either an HMO or PPO.
What appears to be in store for the American healthcare consumer when they go to the Patient Protection and Affordable Care Act (PPACA aka Obamacare) insurance exchanges on Oct. 1 is something that may well remind them of the late 80s and early 90s when the Health Maintenance Organization (HMO)/Managed Care concept was hailed as the healthcare cost containment Holy Grail.
Our fascination with HMOs was short-lived. As a rule, Americans have been reluctant to accept limitations on their health-care choices. In 2012, HMOs accounted for less than five percent of consumer plans sold through eHealth-Insurance.com and, according to a Kaiser Family Foundation survey, only 16 percent of workers with employer-sponsored health insurance were enrolled in HMOs.
LIMITED PROVIDER CHOICES KEEP EXCHANGE PREMIUMS DOWN
However, in order to keep premiums down and “affordable,” many of the health insurance plans sold through the PPACA exchanges will offer limited choices of doctors and hospitals, and may include other limits aimed to control costs, such as referrals from the primary care “gatekeeper” for patients to obtain referrals to see specialists or obtain preauthorization for costly diagnostic or therapeutic procedures.
In a recent Wall Street Journal (WSJ) article, Anna Wilde Mathews reports that insurer-sponsored research involving tens of thousands of consumers has shown that people who will be buying in the new exchanges, many of whom are now uninsured, will be most closely focused on premiums with many willing to sacrifice choice of providers for a lower price.
So, insurers are betting that consumers in the market to buy coverage on the exchanges will be willing to forgo some flexibility and choice in exchange for lower premiums.
Plans that offer limited provider networks typically offer lower premiums because they have either excluded the most expensive providers or insurers have negotiated discounts with participating providers in exchange for routing them more volumes, Wilde Mathews writes.
TWO THIRDS OF FLORIDA EXCHANGE PLANS ARE HMOs
A McKinsey & Co analysis of 955 consumer exchange-plan filings from 13 states found that 47 percent were HMOs or similarly designed plans, which have narrow networks of providers and typically do not reimburse for care provided outside their networks.
Meanwhile, many of the plans labeled as preferred-provider organizations (PPOs) also limit doctors and hospitals in their networks.
According to the Florida Office of Insurance Regulation, of the eleven Florida insurance companies offering plans on the Federally Facilitated Exchange, seven are offering HMOs and four PPOs. Brevard-based Health First Health Plans’ offering is a PPO.
COST/QUALITY CHALLENGE INTEGRAL TO OBAMACARE SUCCESS
“Individuals are making a lot of choices based on cost, particularly because it’s coming out of their pockets,” Steve Hamman, vice president of Blue Cross and Blue Shield of Illinois (BCBSIL) told the WSJ.
BCBSIL will offer plans with smaller provider networks that will cost between 20 to 30 percent less than other plans it sells with a larger selection of doctors and hospitals.
Similarly, WellPoint plans to offer limited networks that cost 10 percent less than plans with larger provider selections. In response to concerns related to HMOs’ limited networks and other cost controls, such as access to the highest quality providers and the inconvenience of possible delays in evaluation or treatment, a WellPoint spokesperson said that the limited networks “have the potential to produce cost savings and continue to offer quality care and convenience.”
The fundamental goals of U.S. healthcare reform should be improving the patient experience of care to include assuring high quality and satisfaction, improving the health of populations through more affordable and accessible insurance coverage and preventive care, and reducing the per capita cost of health care. Whether or not these goals will be met through the Obamacare insurance exchanges remains to be seen.