Medical Insurance Simplified.
There are some terminologies involved in health insurance plans;
HMO (health maintenance organization) is a kind of managed care organization (MCO) that provides health insurance coverage through hospitals, doctors and various other providers with which HMO has a contract.
PPO (Preferred Provider Organization) is the type of insurance plan in which the insured is free to choose his/her own physician.
POS (Point Of Service) plan utilizes some of the features of each of the HMO and PPO plans. Members of a POS plan do not make a choice about which system to use until the point at which the service is being used.
Copayment/copay, is a flat dollar amount paid for a medical service by an insured person. This depends on the insurance company and the plan.
Pediatricians: Pediatrics (also spelled pediatrics) is the branch of medicine that deals with the medical care of infants, children, and adolescents. Doctors of pediatrics are called pediatricians.
Family Doctors : A general practitioner (GP), family physician or family practitioner (FP) is a physician/medical doctor who provides primary care. A GP/FP treats acute and chronic illnesses, provides preventive care and health education for all ages and both sexes. Some also care for hospitalized patients, do minor surgery and/or obstetrics, where they have hospital privileges.
OB/GYN : Obstetrics is the surgical specialty dealing with the care of a woman and her offspring during pregnancy, childbirth and the period shortly after birth. Doctors dealing with obstetrics are called obstetricians. Gynecology or gynecology generally means "the science of women", but in medicine this is the specialty of diseases of the female reproductive system (uterus, vagina, and ovaries). Doctors dealing with gynecology are called gynecologists. Almost all modern gynecologists are also obstetricians.
Nurse Practitioner (NP) is a registered nurse who has completed advanced education (generally a minimum of a master's degree) and training in the diagnosis and management of common medical conditions, including chronic illnesses. Nurse practitioners provide much of the same care provided by physicians and usually maintain close working relationships with physicians. An NP can serve as a patients regular health care provider and see patients of all ages.
What this means to us?
In US, doctors, hospitals and providers register themselves with an HMO and remain in the network of the HMO. They get more patients through the network of the HMO. Thats why they agree with the HMO to provide the services at a discounted rate. As a result, the HMO takes the advantage to charge a lower monthly premium to its customers (insured).
However, there are certain additional restrictions with HMO. The insured has to select a primary care physician (PCP) first. This primary care physician acts like a gatekeeper to medical service needs of the insured. That means, for any health need, the insured has to go to the PCP, if the PCP finds it necessary to consult a specialist, then he/she may be referred to do so. But a patient under HMO model can not directly go to a specialist/doctor of choice directly (other than the PCP) unless the patient has been referred to by the PCP. With exception, emergency medical care does not require prior authorization from a PCP.
Who could be PCP?
- Family Doctors
Many plans under HMO also allow women to select, in addition to a PCP, an OB/GYN whom they may see without referral.
One of the advantages that HMO has due to this PCP model is in addition to using their contracts with providers for services at a lower price; HMOs hope to gain an advantage over every day insurance plans by managing their patients' health care and reducing unnecessary services.
HMOs also manage care through utilization review. The amount of utilization is usually expressed as a number of visits or services or a dollar amount per member per month. Utilization review is intended to identify providers providing an unusually high amount of services, in which case some services may not be medically necessary, or an unusually low amount of services, in which case patients may not be receiving appropriate care and are in danger of worsening a condition. HMOs often provide preventive care for a lower co-payment or for free, in order to keep members from developing a preventable condition that would require a great deal of medical services.
Although PPO plans dont restrict a person to establish a PCP, but they always encourage choosing physicians from pre-approved network of doctors/facilities by giving more benefit returns (possibly including lower deductibles, lower copayments, and higher reimbursement percentages) in non-emergency situations. Otherwise, PPO plans are little more expensive than HMO plans (free to chose your doctor and no referrals needed to go to a specialist). The doctors/caregivers/facilities are independent of insurance company and may hold contracts for reimbursement with multiple insurers. In some cases, pre-certification (prior approval) may be required before non-emergency hospital admissions, testing, consultations or outpatient surgery under many plans. Providers remain liable for malpractice.
Mechanism behind PPO : PPO healthcare providers do hold contracts with each insurance company, or a Third Party Adjusting company, for which they are designated as "preferred", under which they agree to accept the reimbursement that was negotiated at rates agreed upon between themselves and the insurer or the Third Party Adjusting company, at the time of execution of the contract. In the beginning, the insurance companies used actuarial tables to determine a "reasonable and customary fee" for each service and the provider, if he/she generally charged more, was obligated to write off the difference. The insurer would then pay a percentage of the balance to the provider, and the rest would become the responsibility of the insured.
Hence there are two terminologies in PPO billing, Insurance Company Responsibility and the Insureds Responsibility against any actual charge.
HMO Case Management :
Other methods for managing care are case management, in which patients with catastrophic cases are identified, or disease management, in which patients with certain chronic diseases like diabetes, asthma, or some forms of cancer are identified. In either case, the HMO takes a greater level of involvement in the patient's care, assigning a case manager to the patient or a group of patients to ensure that no two providers provide overlapping care, and to ensure that the patient is receiving appropriate treatment, so that the condition does not get worse beyond what can be helped.
The summary of the above facts;
HMO plans need to establish a PCP.
PPO plans do not need a PCP however it is encouraged to have a PCP.
The monthly premium for HMO plans is low as compared to that of PPO.
We may decide upon the selection of the appropriate plan for our own specific needs. For example, a person who frequently travels around may need to visit doctors in different cities. Thus it will be really difficult for him/her to always go through a PCP. Thats why PPO plan is best suited for him/her. A person, who has babies, may like to go through HMO to reduce the premium cost and co-pays.
Most of the companies provide health insurance benefits (pre-tax) by sharing the monthly premium. Some companies even give a medical allowance (taxable) as a fixed amount in your salary. There are advantages and disadvantages in both the cases. For example, if you are a single (male) person and below the age of 35, then taking a medical allowance is wiser. The medical expenses for a single male below 35 are very nominal. He may need to visit a doctor once in a while. Sometimes the medical insurance premium is much lower than the medical allowances (thats the gain). However, if you have a family to support, then it is better to go for a sharable monthly premium with your employer, because the premiums will increase with your age, place of stay and due to some other criteria of the insurance company.
The health insurance plans are available for individual and for family also. You may apply for a quotation from any health insurance provider on your own. In that case, the insurance company may need to know your age and past medical records. Based on these things, they give you a quotation for a specific plan. The older you are the higher is the premium. If you have a family and your spouse is much younger than you, then try to get the quotation in the name of your spouse (no matter if you pay, your spouse does not work, spouse does not have a SSN etc), thus you will have the chance for getting a lower premium.
The employers provide you the health benefits through their group coverage. In that case, it is not necessary for the insurance company to learn about your past medical history. They simply look at the table for premium against your age. Of course, you can not have the insurance in your spouses name for age benefits (the insurance will be in the name of the employee). The other limitation in this category is you can have your insurance with only those companies who your employer has a contract with.
Again, if you are a single male below the age of 35, then chose a plan that has little higher co-payments and deductibles which in turn makes your total monthly premium less. But if you are in the other category, especially when you have babies to support, chose a plan with low co-payment and little high in monthly premium wont bother you as the frequency of doctor visits will be very high.
The lab co-insurance is the co-payment that you make for any lab tests. Similar is the case for X-rays etc. Before selecting a plan, you must review the co-payments, lab and X-ray coverage too. Because, the lab test/X-ray charges are very high, for example, a regular stool test may cost you $150 and an X-ray $200 without coverage.
The deductible should also be considered carefully. This is the amount that you will pay out of your pocket each year for any test/procedure or medical care before your insurance policy starts paying. A little higher deductible will reasonably lower the monthly premium. What does this mean - suppose a person has $2000 deductible and he had a medical emergency which cost him $20,000. He is liable to pay $2000 and the rest will be the insurance companys responsibility. If he has another problem in the same year and gets a huge bill, then every thing will be paid by the insurance company as he has already crossed the limit. And it gets refreshed the next year. Not all persons have medical emergencies every year. Suppose, you needed to have a lab test done and your insurance policy does not cover the lab tests, then you have to pay the entire amount before it crosses the deductible for that year.
If you are taking any medications regularly like, hyper-tension, diabetes and thyroid etc, then you must also review the drug coverage in your plan.
If you are in a HMO plan, then you have to visit your PCP when you are sick. Your PCP may not be available immediately or you may not get an immediate appointment with your PCP. But if you are in a PPO, you may visit any doctor for minor problems like flu, stomach upset, cold etc. Normally, doctors work during office hours in weekdays. If you need to see a doctor during after hours, then it is the Urgent Care facilities that can help you. Depending upon your plans, you will be charged for Urgent Care visits. In my personal experience, I had a PPO and had visited urgent care facilities many times by paying only the co-pay.
If your insurance company is a hospital group (like Kaiser in California), then things will be different. You will get every thing under the same roof (lab test, X-ray, pharmacy, urgent care and emergency) and they are well coordinated. Their working hours are more extended. You can walk-in any time you need to and see a doctor even though he/she is not your PCP. Most of their facilities are open on weekends too.
Normally, the health insurance plans dont cover dental and vision expenses. You may have to go for separate insurances for each of them.
Most of the health insurance plans do not cover plastic/cosmetic surgery. I also dont know who gives a perfect coverage for them.
Lastly I would say, the most important things to consider while deciding upon a health insurance plan;
- Employer group coverage vs. individual/individual family plan
- HMO vs. PPO
- Your family size (with age groups), if any
- Pre-existing condition (chronic disease, if any)
- The doctors/facilities in the neighborhood
- Your affordability
If you are planning for a baby in near future, then you need to be extra careful while selecting the best plan for you. Before buying the plan, you may need to talk to the customer service of the insurance company and discuss with them regarding the OB/GYN, childbirth and post-natal care coverage.