Hint: Size Matters!

Other places on this site discuss the basic aspects of today’s health care plans in terms of the three C’s (CCC) Cost, Coverage and Control (Click Here ). What may not be entirely clear is that the degree of control and quality of care one is entitled to is determined to a very large degree by the basic plan type selection. What few people realize is that the type of plan you choose implies, first and foremost, your access to certain groups of providers (doctors, specialists, hospitals, diagnostic labs, urgent care facilities, therapeutic centers, pharmacies, etc.). To protect yourself, you must be specific and ask the Health Care Plan provider or Insurance carrier the specifics in your area. It is strongly advised that you seek the support of a Licensed Certified Field Broker/Agent ( Click Here) to help you pull the parts of the Health Insurance puzzle together and advise you on your final selection.

The following will give you a general idea how the type of plan you choose actually affects your ability to control the course of your medical care as well as access to providers under the plan.

The purpose is to allow you to gain a better understanding of the differences in Health Care Coverage plan types. Exact Limitations and number of providers available in any particular state or local area may vary substantially. The graphic below hypothetically represents the number of doctorsand medical facitlites available in any given area. Obviously, the actual number will be smaller in more rural areas and lgreater in a large metropolitan area.  For now, let’s assume the graphic below actually represents the number in your local area.

***Population of Providers Given Area pic

We can now provide you with a graphic representation of how the type of plan has an affect on the total number of medical care providers and facilities available to you.

With an Indemnity or Fee-for Service plan you can select any provider or facility and the covered expenses are the same no matter who you use. You are typically not required to see a ‘primary care’ provider before seeing a specialist. Most all plans, however, require approval before having any non-emergency surgery. The yellow rectangles on the graphic below are an indication of how this type of plan generally affects your access to the total population of providers.

***Population of Providers Indemnity pic

Things get more complicated with HMO, PPO, and POS type coverages!

HMOcn (Closed Panel) Prepaid Medical Care 

***Population of Providers HMOcp

HMOn (Network)  Insurance

***Population of Providers HMOn pic

HMOrn (Restricted Network)  Insurance

***Population of Providers HMOrn pic

Notice how the graphic for a HMOrn is very similar, but even more restrictive than a HMOcp!

Preferred Provider Organizations (PPO) represent the final category of the basic types of plans. We must remember that PPO is an acronym for Preferred provider organization. While some insurance carriers advertise and represent that their PPO plans allow you to see “any doctor, provider, or hospital anywhere”. This statement is grossly misleading if interpreted literally as is often the case. For example, if you had the choice of seeing a doctor in the PPO network and one not in the PPO network and you were told that the one out of network would cost you an additional $20,000 or more would you actually spend the extra money? Do you have adequate assets to absorb the difference? For most people the answer is clearly 'NO'. For a more complete treatment of how PPOs differ see Are all PPO plans Created Equal? The point is that you must determine how the insurance company pays the providers in the specific PPO network used by the plan, how much of the bill you are on the hook for beyond what the insurance carrier actually pays them, and how the Deductible, co-insurance, and Maximum Out-of-Pocket provisions change in the event you use a non-PPO provider. Most people make the mistake of only reading how the plan covers medical expenses when you use a PPO provider.

Generally speaking, in areas where multiple PPO plans are offered by more that one health insurance carrier there will be major differences in the size and composition of the largest PPO and the smallest as depicted by the two graphics below. In a large PPO, most all providers and facilities will be enrolled. Some doctors do not enroll in any PPO or HMO simply because they do not want to get involved in processing health insurance claims. The fundamental reason for the difference in PPO network size is related to how much the providers have to reduce their fees to the health insurance carrier in order to participate in the PPO. In some cases the differences in the “Negotiated Fee”, “Allowable Charge”, “fee schedule”, and the actual fees the providers typically charge are very substantial (40-60%). At some point, providers start to feel that they cannot afford to do business with the insurance carrier and drop out of the network. Another reason providers choose not to participate with a certain insurance carrier or PPO network is due to slow payment and overly burdensome claim payment processing.

Most people will verify that their Family doctor, pediatrician, or OB/Gyn is in a network before they enroll or feel they are forced to change anyway and do not investigate the size and composition of the PPO network. So, you might ask: “Why is this important to me?”. The answer is as follows:

The size of the network for a PPO indirectly determines not only the quantity and quality of providers and facilities you may have access to, but the probability that you will end up needing to use a non-PPO provider which affects you financially as well.

The only time you can really control the selection of providers to ensure they are in the network is when the medical care needed is relatively minor or treatment can be delayed for a month or more. Injuries, accidents, emergency room care, and any short notice surgery mean you have limited access to the care you need within the PPO network. In some cases, there may be no specialists of certain types in a network. The only way you can resolve this concern is to ask for access to the PPO network providers to see for yourself or to ask a Licensed Certified Field Broker/Agent ( Click Here) who will research your concerns for you.

The time to know the relative strengths or weaknesses in your coverage or the PPO network size/composition is before you apply.

The picture below symbolizes a relatively large PPO network. You should not rely on the name recognition of the insurance carrier to infer anything about the relative size of the associated provider network in the area where you live. You should not make the assumption that the best known carrier or company covering the largest number of policyholders has anything to do with the network size. In fact, research indicates often lesser known brand name companies actually offer better terms to the providers and therefore have a larger network.  

***Population of Providers Large PPO pic

The relative size of the “smaller” PPO network is indicated below. The significance of the size and composition of a PPO network lies in the fact that the size of the network has both quality of care and financial coverage implications. Virtually all PPO type plans significantly reduce payment terms amount in the event a provider (doctor or hospital) in not in the associated network.

***Population of Providers Small PPO pic

Finally, the most restrictive type of PPO plan is the POS variation. A POS plan most often has the lowest Premium, but not without potential serious consequences. Not only does the POS type plan have the smallest number of providers and facilities, but the plan will not pay for services rendered by any provider not participating in the POS (there are some exceptions to this, but use of a non-POS provider must be pre-authorized and is allowed under certain specified conditions). It is strongly advised that you seek the advice of a Licensed Certified Field Broker/Agent ( Click Here) who can reveal the fine print before you make your final decision on the cost vs. control trade off.

***Population of Providers POS pic

The goal of this exercise was to help you visualize how each plan types affect the degree of choice you actually have and, therefore, your ability to seek the quality of care you choose for your loved ones. Using premium as the sole means to select health care coverage we now also see that the type of plan we select has major implications as well. Furthermore, you now know that the simple rules you often hear or maybe even read such as a PPO is better or worse than an HMO is a gross misrepresentation of the facts because it really depends upon which specific HMO and PPO one is comparing.  Like most all aspect of health care coverage, the real answer is dependent upon specific details not generalities.  For more information on how Cost, Coverage, and Control, to a large degree, is also cast by the type of plan you choose Cost, Coverage and Control (Click Here ).