PPO’s Become Extinct. HMO’s Are Alive and Well

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August 5, 2016 by Harry Stoll

Americans purchasing health insurance plans on the federal government’s exchanges are increasingly discovering their choices of health insurance plans are limited to HMO plans. Recently, the Robert Wood Johnson Foundation released a report that indicates PPO’s are fading on the health care exchanges established by the Patient Protection and Affordable Care Act (Obamacare).

 
PPO’s, if you recall, have been very popular with the American public. Why? PPO’s provide choices and options for consumers. They provide insurance coverage that will pay for both in-network health providers as well as out-of-network providers. Now, instead of purchasing PPO plans, many consumers must buy insurance that offers limited provider networks, and virtually no insurance coverage for seeking care outside of that restrictive provider network.

 
PPO plans are an endangered species about to become extinct. For instance, those enrolling in Houston, TX in 2015 had a choice of 19 PPO’s. There were no PPO offerings on the exchanges for Houston’s health insurance consumers in 2016. PPO’s are also unavailable in Miami, New York City and in many places in New Mexico, Mississippi, and South Carolina. The number of PPO’s offered in Obamacare exchanges plunged 41% from 2015 to this year according to GoHealth. Even when PPO plans are available on the exchange, prices shoot up far higher than HMO’s, according to a Kaiser Family Foundation analysis.

 
The PPO issue is rooted, in part, in individual consumer behavior. Most customers on the exchanges are going to buy the lowest cost plan, and they’re willing to take a narrowly restricted medical network that won’t compensate for out-of-network charges as the price they pay for the lower monthly premium bill. For those consumers who are healthy and unlikely to go to the doctor that often, this is a rational, financially prudent decision.

 
But not everyone has perfect health. No surprise then, they’re the consumers most likely to seek plans that will cost more money in premium but offer greater benefits in return. People who have high medical expenses  often value continuity of care more and that includes having insurance for specialists outside the ‘in-network’ provider list. These people, if they can afford it, logically choose PPO plans to insure their care. This drives up the prices of PPO plans, potentially pushing healthier purchasers away.

As for the insurers, many claim to be losing money on these plans. Blue Cross Blue Shield of TX, for instance, says that in 2014 it paid out $400,000,000 more than it received in premiums for a PPO plan. Needless to say, this plan is no longer being offered.

Even the PPO’s that continue to be offered on the exchange markets are often pared back versions of earlier models. In Illinois, for example, Blue Cross Blue Shield of Illinois cancelled a popular and rather expensive PPO in favor of one with more limited coverage. Prominent hospitals like University of Chicago and Northwestern Memorial are no longer in the network at all. Additionally, out-of-network deductibles increased and there is no out-of-pocket hard stop, potentially leaving sick consumers on the hook for massive bills. Unfortunately, this is a growing PPO practice in the health insurance marketplace.

The Robert Wood Johnson Foundation found the number of silver-level PPO’s on the exchanges with no maximum out-of-pocket limits on out-of-network providers increased from 14% in 2015 to 30% in 2016.

Medical providers will be treating patients with no out-of-network coverage, or very limited out-of-network coverage, potentially meaning the consumer will be ‘balance-billed’ for their treatments and the provider may be stung with large, unpaid medical invoices. Medical providers must be prepared for this sort of outcome. At United Credit Service, we are well aware of this trend, and we make ourselves available to assist medical providers with their collection efforts.

Founded in 1950, United Credit Service, Inc. is a full service, licensed revenue cycle management and debt collection agency in Wisconsin providing effective, customized one on one management and recovery solutions for our business partners. Visit our website at http://www.unitedcreditservice.com, call 877-723-2902 or check out our YouTube video.

 

 

 

 

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