As implementation of the Affordable Care Act enters its seventh consecutive year, an increasing number of insurance providers are removing spending caps on out-of-network health care costs in their “preferred provider” health plans. Further, many people who are choosing these plans are unaware of the change—a knowledge gap that may leave thousands of Americans facing astronomical health care costs next year.
How PPOs Impact Health Care Costs
Traditionally, preferred provider organizations, or PPOs, have been a popular option for families who want flexibility in their choice of health care providers at a reasonable cost. Unlike less expensive health maintenance organizations, which only cover care that’s provided by a designated group of professionals, PPOs allow patients to visit any health care provider they choose. Doctors who are “in network” provide care for a fixed cost that has been negotiated with the insurer. The patient pays a set portion of that cost (for example, a co-pay of $20) and the insurance company pays the rest.
Out of network providers, on the other hand, do not negotiate with the insurer to charge a set fee; they charge any amount they choose. The insurer pays its negotiated cost,(the amount it pays in-network providers) and the patient pays the rest, up to a preset out of pocket annual spending cap (known as the maximum out of pocket expense, or MOOP.)
As of 2016, however, that spending cap is – in many cases –going away. According to an analysis by the Robert Wood Johnson Foundation, 45 percent of Silver PPOs –the most popular option on the health insurance marketplace—have no spending cap on out of network costs in 2016.
Further, many PPO health plans that have retained a maximum out of pocket limit have substantially increased the amount patients must pay. In Montana, for example, the 2016 Blue-Preferred Silver Plan offered by Blue Cross-Blue Shield has an out of network spending cap of $26,000 per individual and $52,800 per family. In Indiana, the bronze level PPO offered by Anthem caps out-of-network spending at $30,000 per individual and $60,000 per family. The mean out-of-network cap for an individual in the United States is in 2016 is $16,700, the Robert Woods Johnson Foundation reports.
By contrast, in-network spending caps, which are mandated by the ACA, are $6,850 per individual and $13,700 for a family plan. These amounts include copayments and deductibles.
Hidden Health Care Costs Leave Families Financially Exposed
Nor are the changes in these PPO health plans easy to discern. Most Americans who use the health insurance marketplace choose their health insurance based on predictable costs, such as premiums and deductibles. And while health insurance providers are required to disclose out-of-pocket maximums on their websites, these numbers are often difficult to find.
Further confounding the issue is fact that affiliated health care providers are not necessarily in the networks of the same health insurance plans. For example, a patient may have a surgical procedure performed by an in-network physician at an in-network hospital and still be on the hook for out-of-network anesthesiologist’s fees. More importantly, the patient rarely receives this information in time to make an informed decision about whether to proceed with care. The first notice many families receive is an unexpected bill.
The choice of a health insurance plan is one of the most important decisions you will make for you and your family. Yet, particularly if you are not insured by an employer, the decision is becoming increasingly more difficult to make on your own. Don’t wait until you find yourself faced with tens of thousands of dollars in medical bills to learn about your options. Contact one of our insurance experts to set up an appointment to review your coverage today. Call us Monday through Friday, 9 a.m. to 6.p.m, at 516-292-3780 or request a free consultation online now.