HMO vs PPO
 

Hi,

My insurance is forcing me to leave my current HMO medical group because of rising costs. I have the option of joining a PPO and keeping my medical group or switching to a different medical group (that is not associated with a university) and keeping HMO coverage. Hopefully, you are still following all of this :)

I've never had a PPO and have no concept of the cost of labs/transfusions/treatments etc. I also have no concept of the paperwork hassles involved. Can anyone comment on the positives or negatives that they have experienced with a PPO to help me with my decision?

Thanks!

Plus of a PPO is that you have wide flexibility of doctors and facilities. Most university hospitals are part of a number of PPO chains.

If you go to a "preferred provider" with the PPO, the rates they will charge the patient is negotiated with the insurance company up front, and you are not required to pay more than the negotiated amount.

The billing is generally done by the provider, and by the time you get the bill, insurance has already paid its share.

Minus is that you have many more out of pocket costs than with HMO's. Besides the premium, there is generally a co-pay for everything. The co-pays can be a percentage of the bill or a flat rate depending on the type of service.

We have a PPO and are generally satisfied with it. What is good with ours is there is what they call a "catastrophic" limit, which is the maximum out of pocket expenses you must pay each calendar year. If you have a choice of PPO's, check the catastrophic limit. IMHO, it is worth it to pay a higher premium because treatments for this disease are expensive. Bruce was diagnosed with MDS in June, he hit the catastrophic limit (of $5000 out of pocket) in August, since then he has had no co-pays.

Nonetheless, this is a lot of money to suddenly be faced with paying. But it is possible to shop around. Bruce's weekly Aranesp injections are billed to insurance between $4000 (85 miles away) and $8000 (22 miles away) a shot. His co-pay was 10% this year. Bruce is driving farther to get his shots because they are half the cost.

We have also seen differences in costs between providers based on how they bill the charges to insurance.

His transfusions have been running about $2000 with his copay $200.

It is too bad that patients have to deal with all of this. It has been quite an education. We have based some of our treatment choices on what providers charge and what insurance would pay.

If you are older than 65, Medicare will pick up more of the out of pocket cost. Unfortunately, Bruce did not opt for Medicare because he was so healthy before this and had good health insurance. He has applied and it will go into effect next July.

I have found that with a PPO you have to pay attention to the insurance statements (called EOBs, for Explanation of Benefits) to see how much your share of each charge is, then match them to the bills from the provider (doctor, hospital, lab) to make sure you aren't being billed for the amounts before insurance. I've been on the phone with the insurance company and/or the provider plenty of times, whenever their paperwork didn't agree with each other, but we always sort it out, sometimes simply by waiting for the next month's bill to reflect insurance payments that hadn't arrived yet.

Hopeful,

We have a PPO (I think it's actually the most common insurance setup) and both Catherine and Neil give good advice. If you have a choice of policies, it's also important to make sure the one you chose has no annual or lifetime benefit cap. Those will be eliminated under the new health care reform law, but I'm not sure in which year that provision kicks in.

Take care!

Greg

I think the removal of caps has kicked in already. Not 100% sure, but pretty sure. It also depends on your employer. Mine, for instance, doesn't pick up the changes until our open enrollment, which happens to be July 1. So, for instance, I can't have my 23 year old son insured again, till then. Now he is on COBRA for a rediculous price!

Thank you everyone for responding to my questions.

The thing that scares me about PPOs is that I use to get the "Explanation of Benefits" forms. They would say the bill was $20k (for example), but that the negotiated rate was $9k. So, the HMO insurance would just pay the $9k and everything would be settled.

If I do a PPO, and go *outside* my medical group, than it is my understanding that the insurance will pay x% of $9k. But the doctor would still be expecting the $20k. So, I'd be on the hook for the remainder.

If this is true, why would I want to do a PPO, since the costs practically force you to stay within your medical group? Maybe other insurances have better plans than this? Or am I missing something?

Hey Hopeful!

It could be that what you are being offered is some sort of hybrid HMO/PPO.

The way a classic PPO works is that the insurance company negotiates prices with as many docs and hospitals as they can in an area, bringing them all into a "network." These are the "preferred providers." What you as a patient have to pay varies based on whether you obtain services "in network" -- that is, from providers on the "preferred" list -- or "Out of network," from providers not on the list.

For example, in my PPO plan, I pay 20% of all "in-network" charges, and 40% out of network. My carrier has a massive network within the state, so this is not a problem for me. It includes all three of the big, university-based transplant centers in the state, so that's good too. But, if I want to go to Hopkins, MD Anderson, or Seattle for my transplant, I am going to bear much more of the cost burden. It pays to get a copy of the Preferred Provider List from your insurer to make sure your docs are included. It may be accessible on-line.

Now, to get to your question. Docs and facilities get to be part of the Preferred Provider Network by agreeing to accept negotiated rates for their services.

Using your example and my coverage, if the service costs $20, but the negotiated rate is $9, the the insurance company pays the in-network provider 80% x $9, or $7.20. You get billed for the remaining $1.80 of the negotiated rate -- not for $20 minus the $7.20 the insurance company paid.

Of course, until you have met your deductible for the year, you're on the hook for the whole $9 (but not $20; you get the negotiated rate). On the other hand, once you've met your out-of-pocket maximum for the year, most plans pay 100% of the charge.

If you go to an out-of-network provider, however, you could very well wind up in a situation where the provider charges $20 (if they wanted to cut rates, they would have joined the network), the insurance company pays what they think is fair (70% of $9, or $6.30, because it's out of network) and you get a bill for $20 minus $6.30, or $12.70.

If you're going with a PPO, you want to always stay in network, or things can get expensive fast. That's why you want to make sure upfront that your providers are included in the network.

Some insurers have huge networks. I'm in NC and Blue Cross Blue Shield of NC has a network that seems to include almost every doc and hospital in the state. But a small network can limit your choices. You should definitely check out the size of the network you will be dealing with.

HMOs are definitely simpler -- though their networks tend to be smaller than PPO networks.

Hope that helps . . . .

Greg

Thanks Greg. That really helps. Now I just need someone to make the decision for me :)