Warning: Opting Out Of Your Insurance Plan’s Provider Network Is Risky

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Many plans sold on the health insurance marketplaces offer a tradeoff, lower premiums in exchange for limited networks of providers. But consumers who opt for a narrow network plan with the idea they will go out of network when necessary may be taking a big financial risk.

The health law generally places limits on how much consumers can be required to pay out of pocket for medical care (not including premiums). In 2014, the limit for an individual plan is $6,350 and for a family plan, $12,700. But those limits apply only to care provided by doctors and hospitals in a plan’s provider network. There may be a separate out-of-pocket maximum for services provided out of network in marketplace plans, or no cap at all, says  Margaret Nowak, research director at Breakaway Policy Strategies, a research and consulting firm that has analyzed cost-sharing and other data on more than 7,000 primarily silver-level exchange plans nationwide.

Similarly, the health law requires that preventive care such as vaccines, screenings and annual checkups be covered at no cost to consumers in most health plans. If someone uses an out-of-network provider, however, they can be charged.

Going out of network opens the door to higher costs in other ways as well. Plans may require patients to pay a higher copayment or coinsurance for an out-of-network provider. In addition, since the doctors, hospitals and other providers are not under contract with the insurance company, in many states those providers may bill patients for any charges not covered by the insurance, a practice known as “balance billing.” The contracts signed by providers who join plan networks generally contain provisions that prohibit them from balance billing enrollees.

Plans sold on the marketplace are divided into four levels based on the amount of consumer cost sharing required. On average, a bronze plan pays for 60 percent of covered medical services, a silver plan, 70 percent, a gold plan, 80 percent, and a platinum plan, 90 percent. But those percentages don’t take any out-of-network care into account, says Sabrina Corlette, project director at Georgetown University’s Center on Health Insurance Reforms.

The assessment doesn’t necessarily tell the consumer the full picture,” says Corlette. “If you sign up for a gold plan and it’s a really narrow network, you might end up paying far more out of pocket than you expect.” 

A McKinsey & Co. analysis of 120 silver-level exchange plans found that 70 percent were narrow network plans, in which at least 30 percent of the area’s largest hospitals are not in the plan, or ultra narrow network plans, in which that number grows to at least 70 percent.

Narrow networks can be a particular problem in HMO-style plans that don’t cover any out-of-network care except for emergency services. According to the analysis by Breakaway Policy Strategies, roughly a third of mid-level silver plans are of this type, typically leaving consumers on the hook for the entire bill if they get care from an out-of-network provider.

The health law does provide protection for consumers when they receive emergency care from a hospital that’s not in their provider’s network. In such instances, health plans cannot charge consumers higher coinsurance or copayments.

However, patients placed on observation status or admitted to the out-of-network hospital from the emergency department are no longer shielded from higher out-of-pocket costs.

“Once the patient is stabilized, the patient will be responsible for whatever the insurer doesn’t pay for that observation or admittance,” says Jeffrey Bettinger, an emergency physician who is chairman of the reimbursement committee of the American College of Emergency Physicians. Patients who will be admitted for any length of time may want to be transferred to an in-network hospital, says Bettinger.

Despite the financial risks, most consumers who are likely to sign up on the health insurance marketplaces say they would choose a lower premium over a broader network of providers, according to the Kaiser Family Foundation’s health tracking poll.

 Among people who are currently uninsured or buy their own coverage, 54 percent said they would rather have a less costly plan with a narrow network, compared with 35 percent who said they would opt for a pricier plan that gave them more choices of providers. 

Whichever type of plan they choose, the blame is on consumers to dig into the details and make sure they understand what they’re buying. There’s a tremendous amount of variability in exchange plans, even among silver level plans, says Richard Smith, executive vice president at Breakaway Policy Strategies.

“I don’t see a lot of standardization,” he says. “Consumers need to be really cognizant. There are design features in these plans of which consumers need awareness.”


People Might Pay More Than $95 For Skipping Health Insurance

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2014 is the first year most Americans will have to have health insurance or face a tax penalty.

But most people who are aware of the penalty think it’s pretty small, at least for this first year. And that could turn into an expensive mistake.

“I’d say the vast majority of people I’ve dealt with really believe that the penalty is only $95, if they know about it at all,” says Brian Haile, senior vice president for health policy at Jackson Hewitt Tax Service. “And when people find out, they’re stunned. It’s much, much higher than they would expect.”

In fact, “the penalty is the maximum of either $95 or 1 percent of taxable income in 2014,” according to Linda Blumberg, a senior fellow at the Urban Institute’s Health Policy Center. “For people with higher incomes, it can be much more sizable than $95.”

Blumberg says that even for people with more moderate incomes, it’s important to remember that the flat fee penalty will be assessed for every family member who lacks health coverage.

“So if it’s a two-adult household and both are uninsured, it’s twice $95 — $190,” she says. “Then if there are any children in the family that are uninsured, the penalty for each of them is half of the $95.”

The flat fee penalty maxes out at $285 next year. To help people figure out what they might owe, the Tax Policy Center, jointly run by the Urban Institute and the Brookings Institution, just posted an online calculator. And Jackson Hewitt has its own “How much is my tax penalty?” worksheet.

Haile says it’s important to remember that even if most of the family has insurance, having just one uninsured member can trigger the penalty.

“If you’ve got someone who comes home to live, it could cost you much more than a spare bedroom,” he says. “If you claim that child as a dependent, or could claim that child as a dependent, then you suddenly become liable for penalties if that child lacks minimum essential coverage.”

The 1 percent penalty, for those hit with that, also has a cap, but the penalty can still get pretty big. The cap is tied to the cost of the national average bronze-level insurance plan. This year’s top penalty could be about $3,600 for an individual, and $11,000 for a family of four.

If you’re uninsured and earn enough to be potentially liable for penalties, you needed to sign up for coverage by March 31, 2014 in order to avoid them.

Your only chance to buy insurance, unless you have a special qualifying event, is during the open enrollment period,” Haile says, “which made March 31 an incredibly important date for avoiding the penalty. 

This is much different from how things were before the law’s implementation. But the Urban Institute’s Linda Blumberg says it’s because of the new rule that protects people with pre-existing health conditions.

“Now the insurance companies can’t say no, even if you’ve had serious health problems in the past, or have a serious health problem today. They can’t deny you,” she says. “And because of that, people are restricted to obtaining coverage during the open enrollment period or during some other open enrollment period where they can make changes in their family status or income.”

Indeed, changes to family status — a birth, divorce or job change — will allow you to buy or change your coverage outside the open enrollment period. And if you’re eligible for Medicaid or your kids are eligible for the Children’s Health Insurance Program, you can sign up anytime.

There are also lots of exemptions from the penalty itself, Blumberg points out, even for people who remain uninsured. The biggest is for having income below the tax filing threshold.

This year that’s roughly $10,000 for a single person and $13,000 for a head of household. If you don’t have to file income taxes, you won’t have to pay a penalty. You can also get an exemption if the cheapest available insurance would cost more than 8 percent of your income, if you have unpaid medical debt, or for any of several other reasons. But for most people with incomes above the poverty line, time has run out to obtain health insurance, unless there is a qualifying event, to either get insurance or prepare to pay up instead.

Huge Growth Predicted For Telehealth

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The growing anticipation around the significant adoption of telehealth services received a boost from a research report that projects a very good 20-fold growth in telehealth patients. The report telling these figures indicates that telehealth is being embraced by patients and medical providers.

The consulting firm report by IHS Technology, predicts that the number of patients globally using telehealth services of one sort or another will jump from 350,000 in 2013 to 7 million by 2018.  

Various drivers are at work in leading to the rapid adoption of telehealth by consumers and medical professionals.

Consumers want to take a more active role in their health care and see telehealth as facilitating that process. Many people are already familiar with some level of involvement at home in monitoring their own health, and the desire to avoid a trip to a medical clinic for routine checkups or simple procedures appeals to a large percentage of patients.

For medical professionals, telehealth offers myriad benefits, from the easing of impossible schedules to directly addressing some of the most problematic medical trends faced by the profession today.

The IHS study reported “sharp decreases in [hospital] readmission rates and mortality rates, alongside increases in adherence through patient engagement.”

Reducing hospital readmissions within less than 30 days of a release from hospital care has become a major Medicare focus. Any technology that addresses this issue positively will lead to  “greater reimbursement from regulatory bodies,” the report says. “As a result, providers will integrate telehealth into their health care delivery.”

IHS identified the increasing availability of mobile health hubs as critical to the industry’s growth. “The introduction of mobile health hubs is boosting the market, lowering the cost of telehealth while increasing overall value propositions,” the report said. The expansion of the wearable health technology market also will spur telehealth’s adoption.

“Amid rising expenses, an aging population and the increasing prevalence of chronic diseases, the health care industry must change the way it operates,” said Roeen Roashan, medical devices and digital health analyst at IHS Technology. “Telehealth represents an attractive solution to these challenges, increasing the quality of care while reducing overall health care expenditures.”

By most accounts, telemedicine is rising in popularity among employers and health care executives — and now it looks like consumers worldwide are intrigued.

According to an Intel survey, 72 percent of consumers said they’re willing to see a doctor via telehealth video conferencing for non-urgent appointments. And half said they would trust a diagnosis delivered via video conference from their doctor.

This and other findings from Intel revealed consumers remain optimistic about health care – at least in terms of technology and innovation.

Some consumers are so optimistic about technology, in fact, that more than half believe the traditional hospital will become obsolete in the future.

These survey results, said Eric Dishman, general manager of Intel’s health and life sciences group, indicates “very high willingness of people to become part of the solution to the world’s health care problems with the aid of all sorts of technologies.”

“Most people appear to embrace a future of health care that allows them to get care outside hospital walls, lets them anonymously share their information for better outcomes, and personalizes care all the way down to an individual’s specific genetic makeup,” Dishman said.

The majority of people surveyed also believe technology innovation holds the best promise for curing fatal diseases — more than increasing the number of physicians or additional funding for research.

The study, “Intel Healthcare Innovation Barometer” was conducted across eight countries by Penn Schoen Berland in Brazil, China, France, India, Indonesia, Italy, Japan and the United States.

Other findings from Intel include:

  • More than 70 percent of people globally are receptive to toilet sensors, prescription bottle sensors or swallowed monitors.
  • 66 percent of people say they would prefer a personalized health care regimen designed specifically for them based on their genetic profile or biology.
  • 53 percent of people say they would trust a test they personally administered as much or more than if performed by a doctor.