Minnesota Attorney General's Office
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Selecting and Understanding Your Health Coverage.
Your health coverage is important because your health is important. Before you choose a health plan, you need to ask the right questions. If you already have health coverage, you need to understand how it works. Start by understanding:
Does your health plan use a closed panel or is there a point-of-service (POS) option? A closed panel means the health carrier will only pay for your treatment if you see a "participating provider." You can not go outside the network for treatment. If your health plan has a point-of-service option, you may go outside the network for treatment if you pay a larger share of the cost. Check your contract to find out how much more you will pay to go outside the network.
Some plans require you to select a primary care provider, who acts as a "gatekeeper." This provider makes referrals and decides what care is appropriate for you. The health carrier will not pay for a referral to a specialist unless it has been authorized by the gatekeeper. You should find out whether your plan uses gatekeepers and consider whether you are comfortable with this approach. Perhaps you prefer access to specialty care without a referral.
Health plans compensate physicians in several ways. Some health plans employ their own physicians to provide treatment to their members. This is called a staff model HMO. In the past, health carriers typically compensated physicians under a fee for service structure. This meant that a health carrier paid the physician his or her actual charges for a particular service. Today, some health carriers still compensate physicians under what is more typically a "discounted" fee for service structure. Under this structure the physician is paid for the actual services the physician provides, but at a discounted rate. The discounted rate is agreed to by the physician and health carrier. Under both the traditional and discounted fee for service structures, the more treatment a physician provides to a particular patient, the more the physician is paid.
More recently, capitation agreements have become a more popular payment structure. Under this type of agreement, a health carrier pays a physician a flat (or "capitated") amount per patient. The physician is paid the same no matter how much treatment the patient receives. If the physician provides or authorizes less treatment than the capitated amount, the physician makes money on the patient. If, however, the physician performs or authorizes more treatment than the capitated amount, the physician loses money on the patient. A capitated arrangement creates financial incentives for physicians to limit treatment or referrals.
In addition, health plans sometimes use "withholds" as an incentive for physicians to hold down costs. In this system, a portion of the physician's compensation is withheld until the end of the year when the physician's use patterns are reviewed. Physicians who are efficient may be paid the previously withheld share. Physicians who are "inefficient" or "overutilized" treatment may not receive the previously withheld payment. Withholding part of a physician's compensation can serve as a financial incentive for a physician to limit treatment or referrals.
Under most policies you will be responsible for certain payments. Look at your policy to determine the payments you will have to make. Here are some of the main payments to look at:
- Premium. This is the amount you pay to obtain insurance coverage. Compare premiums among carriers and among plans of the same carrier.
- Deductible. A health care deductible works the same way it does for other types of insurance. For instance, you may be responsible to pay for the first $500 of treatment before your policy kicks in.
- Copay. This is the amount you pay each time you receive treatment or pharmaceuticals. For instance, your health plan may require you to pay $10 each time you go to the doctor.
- Annual out-of-pocket maximum. This is the maximum amount you will be required to pay each year in copays and deductibles.
Most health carriers have a contract with a drug formulary that purchases prescription drugs directly from the manufacturers. in turn, the manufacturers typically give the formulary certain rebates and discounts. Find out how your carrier's formulary works and what drugs are included.
Your policy tells you what treatment is covered, what treatment is excluded and what the conditions for payment are. Read the policy carefully.
Some policies contain pre-existing condition limitations. This means you do not have coverage for a pre-existing condition for a certain period of time. If you will be covered under a new policy, and you have a pre-existing condition, find out if there is a pre-existing condition limitations period and how long it is. Click here for more information about pre-existing condition limitations.
Next page- Reading and Understanding Your Policy