Before the days of managed-carehealth insurance plans, most people had fee-for-service plans, or indemnity insurance. This type of plan offered you the freedom to go to any doctor you wanted. However, today's health insurance plans are dominated by the managed-care model found in HMO, PPO and POS plans. In these plans, the insurance company creates an entire list of doctors and facilities from which you have to choose. This list is known as the provider network -- it's composed of physicians, hospitals and other providers that offer health care services to members of that health insurance plan.
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So, how are these provider networks created?
To stay competitive, health insurance plans must have a fairly diverse list of providers and hospitals within their networks. The same is true for doctors and hospitals, which often rely on inclusion in major plans in order to keep their doors open. To become part of a network, a provider must have a contract with the health insurance company. This agreement usually gives the doctors and other providers a steady stream of patients and offers the health insurance companies service at reduced rates. Because of this, managed-care plans are usually more affordable than fee-for-service plans -- but they impose limitations on your freedom to choose your own medical providers.
A health insurance company usually determines who it contracts with based on how aggressive a provider's discount is and how available the provider's services are to the company's customers. However, most plans consider other credentials for inclusion in the network, including the provider's educational background and board certification.
Once providers are included in a network, they agree to follow the plan's rules. We'll talk about the network rules for specific managed-care plans in the next section.
An HMO (health maintenance organization) plan offers health care with low co-pays and usually no deductibles or coinsurance. To receive this low-cost health care, you have to stay within your HMO network. From this network, you must choose a primary-care physician (PCP) who helps coordinate your care using other providers in the network. If you receive health care from providers outside the network, the plan doesn't cover the cost. The basic rule is to stay in the network, and both you and your provider are expected to adhere to it.
While you do have less freedom to pick your providers in an HMO plan, your health care fees are often lower than those in other managed-care plans. This is because HMOs offer providers a large pool of potential customers who cannot go outside the network to receive care. This means that HMO providers can afford to give a larger discount.
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PPO (preferred provider organization) networks are created in the same way. However, a PPO plan also offers you the option to visit providers outside the network. The rule for patients and doctors alike is to try and stay within the network, but this rule can be broken if you or your doctor feels that your best care will be found outside the network. The downside is that if you choose to go outside the provider network, your expenses (like co-pays, deductible and coinsurance) will probably be higher than if you stayed inside the network. In fact, depending on your plan, a deductible and coinsurance payment may be waived if you use providers in the network. For example, if you see a provider in the network for a routine physical, your plan could pay 100 percent of the bill even before your deductible is met, which means you are responsible for only a co-pay. But if you see a provider outside of the network for the same routine physical, your plan may only cover 80 percent of the bill, and that's after you have met your deductible.
Sorting through the long list of providers in your plan's directory can be a daunting task. Most of us with managed-care plans want to pick an in-network provider. But how do you pick the right provider for you?
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- Ask trusted friends, family and other health care providers for recommendations, then check the directory.
- Find doctors who are convenient to your location and whose office hours work for your family.
- Be sure the doctor is affiliated with hospitals that are close by and are also included in your provider directory.
- Check the doctor's credentials in a professional directory like the American Medical Association's DoctorFinder. Ask about the doctor's philosophy and be sure it coincides with yours. For example, does he or she focus on preventive medicine like routine checkups and immunizations?
For more information about provider networks, check out the links on the next page.
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More Great Links
- Family Doc: Understanding Your Health Plan's Rules. http://familydoctor.org/familydoctor/en/healthcare-management.html