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Santé Magazine
Salute Magazine
In our last column, we explored the first of three types of health insurances available called Traditional plans. While great for the world traveler who wanted no doctor restrictions, doctors and hospitals were under no obligation to charge the going rate. Who pays the balance of the higher rate ? I’ll give you a clue…it’s NOT the insurance company. Faced with the uncertainty of how much you could ultimately pay for care, insurance companies formed something called PPO’s or Participating Provider Organizations, which is the subject of this column.
A PPO is just like traditional plan in that you can use it anywhere, with any healthcare provider. Last week we compared traditional plans to Grandpa Jim who was straight-shootin’ and no-nonsense. While Grandpa Jim may have been relatively inflexible, Grandma Mary was the one who offered you goodies. PPO’s are very similar to those two people put together. With a PPO, you are free to use any health care provider, anywhere. However, if you use physicians or hospitals listed in the directory provided to you by your PPO, you get some very important ‘goodies’.
For doctor visits you no longer have to pay everything until you meet an upper amount called your deductible but instead pay a flat fee called a copay. Prescriptions and in some instances, labwork and xrays are also covered for a copay. For hospitalizations and all other expenses covered by the insurance, if it’s not covered by a copay, it‘s subject to your deductible and coinsurance (abbreviated COINS). Just a brief reminder about what COINS is: After your deductible, you typically pay 20% or more of the bill up to a maximum amount called your Out-of-Pocket (or OOP). Typical OOPs are $1000, $2000 or $3000.
After that the insurance company pays the rest up to your lifetime maximum amount which is the most an insurance company will pay on your behalf. People ask me, “You mean the insurance company can stop paying ?”. In a word, yes, but don’t sweat it. Most insurance companies’ lifetime maximum rate is $1 million or more. While copays are nice, many people can afford to pay doctor visits if they had to. Where PPO’s really shine is in their contracted (also called negotiated) rates. This means that any time you use a PPO doctor you are guaranteed that they will take what the insurance company pays and not ask you to pay anymore. This has two advantages: 1) You will not have to check to see if your doctor charges the going rate in your area (which is what virtually all insurance companies pay, with you paying anything over that) and 2) for smaller bills, you will get a huge break.
An example: Let’s say you take your son into the emergency room because he has a 104 degree fever at 3am. Unless you have a copay for the ER visit, you will have to pay your deductible and coinsurance. There’s a big difference between $1000 ER bill and a $350 bill. That difference is the PPO contracted rate, which you get using a PPO provider. The discounts can be really big, especially for hospitalizations. (I had a recent outpatient knee surgery that was billed at $25,000, which was then discounted down to $2000). While PPO’s are a good value for most people there are a few things to watch out for.
A PPO is only as good as it’s providers. Make sure that there are doctors and hospitals in your area. Secondly, ALWAYS verify that the provider is still in the network. Most PPO’s now have their directory online, which is usually the most up-to-date way to verify your doctor still is a contracted provider. Thirdly, and perhaps most important, is to not take your doctor’s word that they are in the network. EVERY doctor will say they ‘take’ a certain insurance…because they do. Remember at the beginning of the column we said that you could go to any doctor ? You can…but at a price. If the doctor is not a contracted provider, you’ll have to pay for the total bill up to your deductible with NO copays and no reduced rate. Not too bad, but if you have to go to a hospital, oftentimes the insurance company doubles the deductible and always increase your coinsurance amount (an 80/20 plan usually changes to a 60/40 or even 50/50). Your maximum Out-of-Pocket goes up too. Another area to pay attention to is wellness. PPO’s typically have an upper limit ($200 to $500) for wellness.
We’ll have to wait until next week to see the plan that emphasizes your wellness benefits. After that, we’ll be up and running with the basics and can tackle some really fun (and money-saving) topics. Until then, be healthy !
