EasyWayUSA

Unlike many foreign countries like Canada, the United States does not offer a national health care system. Residents of the United States are not entitled to health care. Rather, they must secure their own health care plans in order to receive the best health care possible. Over the years, it has become very expensive to obtain health care in the United States. The government provides minimal assistance to citizens unless they are elderly or poor. People who immigrate to the USA late in life face special problems (See Medicare and Medicaid for more information on health care for seniors and low income families). The USA has some of the best medical facilities, trained doctors and equipment, but you had better be rich, poor or have medical insurance if you want to be able to take advantage of these services.

In the past, health care was provided by independent doctors and hospitals. Managed care refers to a health care system that links doctors, hospitals and insurance plans. Under managed care, the patient becomes part of an organized provider system. This organized system is an arrangement between doctors, hospitals and pharmacies to provide health care at a reduced cost to patients.

There are several different health care plans in use today. Each is briefly discussed below, with links for more information. The two most important plans are:

HMOs are an excellent choice for those patients who wish to save money on health care costs while still receiving quality care. The HMO is a very tight network of doctors, hospitals and health care providers who have a contract with medical insurance companies. This contract allows the medical insurance company to receive discounted health care services, which they pass onto their members. Some HMO companies actually own their hospitals and directly employ doctors, nurses and physiotherapists. By doing this, the HMO can control the cost of health care while still providing some of the best facilities and services in the world. In essence, an HMO is a web of doctors, hospitals and pharmacies, all connected to one another by the HMO. In order to receive discounted rates through the HMO, a patient can only be treated by doctors who are part of the “web.”

When patients enroll in an HMO, they are required to select a “family doctor,” also known as a Primary Care Physician (PCP) or Health Care Provider (HCP). The family doctor provides all of the basic care for these patients, including annual exams, vaccinations, routine health problems, etc. Typically, when patients visit their family doctor (PCP or HCP), they are required to pay a small fee known as a “co-pay.” A co-pay is the portion of the doctor’s bill that you are responsible for paying. This co-pay is paid directly to the family doctor, and is around $5 to $40. The co-pay amount will vary depending on the type of medical plan you have. The family doctor then bills the HMO for the remainder of his or her reduced fee. Patients are not required to submit any claims or additional payments.

EXAMPLE—John and The HMO

The best way to understand an HMO is to look at a specific scenario.

John is a member of an HMO. He has selected a family doctor (PCP or HCP) named Dr. Brown. Dr. Brown will act as the foundation for all of John’s healthcare. He will provide annual exams to John as well as treat John for any routine illnesses. John visits Dr. Brown for regular checkups and pays his co-pay for each visit. During one of his routine exams, Dr. Brown hears an irregularity in John’s heartbeat. To further determine the cause of the irregularity, Dr. Brown decides to refer John to a heart specialist for testing. He refers John to Dr. Thomas, who is a heart specialist. Since Dr. Thomas is also a doctor contracted by the HMO, John only has to pay his normal co-pay. The HMO is notified of the referral and reimburses Dr. Thomas accordingly.

If John did not have any health insurance, he would have to pay for his visit to Dr. Brown and Dr. Thomas. The bill would most likely have totaled several hundred, if not thousands of dollars. If this had been the case, John may not have gotten the care he needed because he would have been unable to pay for the costs associated with the necessary treatments. John’s case is certainly a small one in comparison to a patient requiring major surgery or long term care. A patient being treated for cancer undergoes extensive testing and drug therapy, and the total cost can reach hundreds of thousands of dollars. This is simply too much for a single person to afford without health insurance. Under an HMO, that same cancer patient could receive the care he or she needed with minimal out-of-pocket expense.

ü Minimal expense to patient. Because patients select one doctor for all primary healthcare, the costs are substantially lower and the patient is only required to pay a small co-pay for services.

ü Ease of use: Because doctors in an HMO are part of a network, all billing goes directly through the HMO. In most cases, the patient is only required to pay the co-pay at the time of service.

ü Preventive healthcare. HMOs want their members to stay healthy. It is more cost effective to keep patients healthy by offering routine care than to allow them to get sick. “An ounce of prevention is worth a pound of cure.”

Patients MUST choose a PCP. While there are many excellent doctors contracted by HMOs, your favorite family physician may not be one of them. If he or she is not contracted by the HMO, you cannot see him/her and receive coverage.

Because HMOs are “managed health care” systems, the ultimate decisions regarding what services are covered and what services are not covered lies with the HMO itself. The purpose of this management is to prevent doctors from ordering needless (and costly) tests and treatments. The HMO determines what is reasonable and necessary. While in most cases, this does not interfere with a patient’s medical care, there have been cases where HMOs have denied payment on treatments they consider ineffective or “experimental.”

For more information on HMOs, including specific plan options, check out these websites:

www.insweb.com This is a comprehensive insurance website. You can request instant quotes for various types of insurance policies, including medical insurance. The site also provides basic information on medical insurance terminology.

http://www.ncqa.org This site rates managed care plans using a “report card” system. You can view many different HMO Plans available today, and see how they rank in various categories (accessibility, qualified providers, etc)

An alternative to the HMO is the PPO. Like an HMO, a PPO contracts doctors for a reduced fee. However, a PPO is more flexible in its requirements of patients. While there is still a “web” of healthcare providers, the web is not as tight as the HMO and because of this, patients can choose to seek care outside the web. However, the flexibility to choose doctors in or out of the web comes at a price. Patients often have more out-of-pocket expense when they use out of network doctors. While this type of plan may be inappropriate for some people, others prefer the flexibility to choose doctors based on their own preferences.

Like an HMO, PPOs typically require patients to select a family doctor, often referred to as a primary care physician (PCP) or Health Care Provider (HCP). A PPO contracts healthcare providers just like an HMO. If patients decide to seek care from the providers within the web, they will save money, oftentimes only needing to pay a small co-pay (usually between $5-$40, however this varies depending on the plan). However, patients also have the option of seeking care outside the web. Consequently, patients can consult a specialist or second physician whenever they feel it necessary. However, they are strongly encouraged to see physicians who are part of the network. If they don't, they are reimbursed less -- anywhere from 80 to 100 percent reimbursement for treatment by PPO providers versus 60 to 70 percent for treatment by physicians outside the network. Additional features of the PPO include deductibles. A deductible is the amount you are required to pay before the medical insurance company will kick in payments. Depending on the plan, the deductible can be anywhere from $250 to $5,000. Once you’ve met your annual deductible, the insurance company can begin paying benefits. Additionally, some plans have a co-insurance maximum. This maximum is the amount you pay before the insurance company will cover your care 100%.

For example, if a patient has a plan that offers 80%/60% coverage, with a $500 deductible and a $5,000 co-insurance maximum, the patient would:

2) pay either 20% or 40% of the next $5,000 in medical care bills (percentage depends on whether the doctor is in the network or out of the network).

After the $5,000 maximum has been reached, the insurance company will pay 100% of medical care bills.

EXAMPLE—John and The PPO

The best way to understand a PPO is to look at a specific scenario.

John is a member of a PPO. John chose a family doctor (PCP or HCP) for routine care. He did this to save money—PPO’s offer greater coverage when the patient visits doctors that are within the primary network. John’s routine care only costs him a small percentage of the total bill because he is using an in-network doctor and has met his annual deductible of $250. During one of his visits, his doctor notices the irregular heartbeat and decides to refer John to a specialist. The doctor tells John that he’d like to refer him to Dr. Thomas, a specialist within the PPO network. John decides he would rather see Dr. Michaels. Since Dr. Michaels is not part of the PPO network, John is required to pay a higher percentage of his bill. The PPO will still cover part of the cost (usually 60 to 70 percent), but will not cover it all. By doing this, the PPO encourages patients to use doctors within the network. However, the PPO is flexible enough to allow a patient to seek care out of the network if he or she is willing to pay some of the cost.

ü Flexibility. Patients can visit doctors within the web (network), and receive coverage from 80 to 100 percent, or go out-of-network and receive coverage ranging from 60 to 70 percent of the total medical bill.

ü The care that a patient receives is not dictated by an HMO. If a patient wants to see an acupuncturist (not covered by most HMOs) for care, he or she may do that, and possibly be partially covered by the PPO.

ü If patients are not happy with a particular doctor, or wants a second, third, fourth, etc. opinion, they are allowed to visit any doctor. The coverage amount is not as high as in-network doctor visits, but the coverage offered does offset some of the costs.

ü PPOs typically cost less than HMOs because the patient is required to pay a higher portion of the bill.

Cost. For patients looking to spend as little as possible, a PPO can be somewhat expensive. Since the patient is often paying a percentage of the care, it can cost significantly more than an HMO co-pay. Additionally, patients may be required to pay a deductible before benefits kick in.

Oftentimes, the patient is required to file a claim with the insurance company. While an HMO automatically bills the participating doctor, a PPO may require the patient to file a claim for an out-of-network doctor visit. This can be time consuming and oftentimes confusing.

Note: The above is a general explanation of HMO’s and PPO’s. There are many types of programs and they do vary.