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The HMO/PPO Hybrid! Watch Out For The Trap That Costs You Money!

Updated on December 12, 2010

The PPO With A Tiered-Plan Can Kill Your Bottom Line!

Many employers offer PPO plans to their employees. Individual health insurance policies that offer a large network of preferred providers seems to offer the most choice for just a little more money than a traditional HMO, but that is a fallacy. The costs associated with these plans are far more than double that of the HMO, and the choices are limited when faced with the fact that most PPO plans today are a hybrid of the HMO and PPO. These PPO's come with difficult to understand tiered-levels of care as well as significantly higher costs anytime you require the care of a specialist or testing of any kind. The new and improved PPO is definitely not new and it is certainly not improved. It is an attempt, usually successful, to cost you more money and to allow less choice than a traditional PPO. These plans have become the standard and are for the most part, an HMO in disguise. People who have heard nightmare stories of HMO's are fooled into believing that the PPO plan offered is not the feared HMO, when, for the most part, it is. If you are not insurance savvy, you will fall into the trap and find that your premiums are higher and you are still required to choose a participating primary care physician with his own network and member hospital. If you stay within that group, you will be charged at the lower-cost tier (like an HMO but with a percentage of cost tacked on), but if you venture out, your charges will immediately fall into the second, higher costing tier. On many occasions, you won't even know that you have ventured out of the lower cost tier. That is precisely how you become trapped.

When You Have A Hybrid, Make Sure You Know Your Benefits!

When you have an HMO/PPO hybrid, you must choose a primary care physician. Do not assume that your PCP knows your plan and defiinitely do not assume that the PCP's staff knows your plan. If your PCP is eligible to become a primary care physician in your network, he or she has signed a contract with the insurance company, which outlines his duties and responsibilities as the gatekeeper of your plan . He should know that the contract states that in order for you to receive the full benefits of your policy with the least amount of money being spent by you, that his referrals for your care must be to doctors that are members of your in-house network. He may not know and his staff definitely may be clueless. The billing staff sees PPO and they believe that you may be referred anywhere, to anyone. They may be unaware that your costs go up dramatically if referred to someone who is not in your medical group. It is your responsibility to know your policy. Take the time to read it and understand it. If you don't, you will end up paying far more than you should. The problems with this are usually the result of having a PCP in a small group or his own private office as opposed to being in a large group, with all specialties housed in the same suite of offices. The reason that your PCP is unaware is because he has probably signed close to a hundred contracts so that he can treat numerous patients, all having different health insurance policies and he does not remember the terms of all of the contracts. It does not excuse him, but explains his lack of familiarity with your particular plan.

If you see your PCP and he refers you to a specialist, ask if the specialist is in your chosen PCP's group. If the specialist is a member of the in network group, you will pay your copay only and NOT an additional cost share or co-insurance. For example, your PCP may be friends with the orthopedic surgeon down the street, but that specialist may not be a member of your in-house group. That out of network visit and any treatment will be billed differently and paid differently. You will become responsible for not only the copay, but your out of network cost, usually a percentage of the bill. In addition to the copay for the visit and the percentage, any treatment rendered will be paid in the same manner. As an example, you see an out of network ortho and are given a series of cortisone injections. Instead of your $20.00 (estimate) copay, you may become responsible for hundreds of dollars because each of the injections will be billed as a separate procedure. Don't ever think that the referral you receive is actually a real (authorization)referral. Always, always, always ask. It makes no sense to go to the PCP's friend that you don't even know, when you can go to an in-house specialist that you don't even know and keep your money in your wallet.

If you have fallen victim to this, you do have recourse. In the contract that your PCP signed, he or she agreed to do all of the necessary paperwork to get authorization for all of your referrals. If the PCP has just handed you a referral without doing any paperwork, he has not applied for or received authorization. It takes longer than 2 minutes. If you thought that the PCP was referring to in-house specialty care, call your insurance company and insist that you were told this was a referral and that the PCP, by way of his contract, should have made you aware that the ortho was not in-house. The PCP and the ortho may have to eat the extra costs. That is one of the clauses in both of their contracts.

The PPO Hybrid May Have Pre-Existing Exclusions!

While many people like the flexibility of the PPO, they may not realize that most PPO's have exclusions for pre-existing conditions. In the state of California, HMO's offered by employers are not allowed to have pre-existing clauses, while PPO's are. Even when faced with the legislation of the Affordable Health Care Act, some insurance companies, such as Anthem, have not changed their PPO policies to halt this practice. In addition, they have grandfathered already existing policies and do not cover children up to the age of 26 as mandated by law. The ability to grandfather already existing policies has allowed many insurance companies to circumvent the new legislation.

So for your protection, understand the hybrid PPO and some of its major features:

  1. You must pick a primary care physician and that includes his specialist members and in-house hospital and testing facilities. Any out-of-net referral will cost additional money.
  2. There are usually two tiers to the hybrids. The lower cost tier has only a copay when seeing any of the in-house physicians. Any testing and hospitalization using the in-house facilities will fall under a less expensive coinsurance or cost share. The yearly out of pocket maximum cost will be usually half the amount of the second out-of network tier.
  3. When seeing an out of house physician, you will be responsible for not only a copay, but a higher percentage coinsurance. In addition to the copay, you will also owe any treatment at the assigned percentage for out-of-network care.
  4. If the PPO plan you are offered is already an existing plan that your employer has been offering, pre-existing and child coverage rules fall outside of current legislation due to grandfathering and many insurance companies are using the grandfathering laws to protect themselves.
  5. Staying within your plan, hospitalization will cost you usually half the amount that going out of network will cost.
  6. If you are know that you are going to need hospitalization or surgery and the hospital you want to be treated in is out of network, or the surgeon you desire is out of network, you can call your insurance company and change your PCP temporarily. Change to one that refers in house to the hospital or surgeon you want. You may think this is unwise, but consider it. If there is a surgeon that is highly qualified, he is the one that will be performing the surgery, not the PCP that you love so much. If a temporary change can save you $5,000.00 or even $10,000.00, you can love your PCP better with that money in your pocket, after the surgery is finished and you change back.  

If your PPO is one that requires a gatekeeper, consider opting for the cheaper HMO plan if your employer offers one. Remember, if a PPO plan requires a gatekeeper, it is basically an HMO, just with higher costs. Don't give your money away, especially when an HMO is less costly. They are not as restrictive as they were years ago and there are many ways to maximize your control and choice.

PPO's Can Offer Choice, But Choice Comes With A High Price!

I very rarely recommend a PPO, because I have repeatedly seen the financial difficulties they cause. 80/20 doesn't sound like a bad deal, on its face, but when you end up with a $50,000.00 hospital bill after three days of unexpected hospitalization, that 20% translates to a $10,000.00 financial hit. Some PPO's have a yearly maximum that can offer partial protection, but increasingly, the insurance policies are changing to exclude some costs from adding to the yearly maximum.

Blue Cross Anthem had originally planned a 39% increase in premiums for 2011. After outrage by consumer groups, they revised their requested increase to 20%. But they found a way to get to the 39%, without anyone even realizing it.

The Anthem plan referenced in the beginning of this article states that beginning in 2011, any copays for doctors or meds will not be included in your yearly max. Your deductible is also not considered. Quite a neat little trick! This particular policy has raised its yearly premium, has almost doubled the yearly max out of pocket costs, has raised copays for doctor visits and meds, and now doesn't even consider your copays or deductibles to be a part of your yearly max! Through years of contract review and patient financial review, the most money hungry company witnessed by me has been Anthem. I have reviewed Anthem policies offered in states from California to Florida, and Anthem is by far, in my opinion, the greediest and most consumer unfriendly company witnessed to date.

This policy and many others from Anthem have ignored and circumvented new legislation. They have not, to my knowledge, offered any of the consumer protections put into law this past year, and they still try to blame the new legislation for raising their rates. Unbelievable! When any company preys on consumers and even employers who cannot comprehend complex insurance policies and all of the legal mumbo jumbo contained in those policies, their predatory behavior must be monitored and regulated.


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