Medicare Network Explained
Have you ever tried to go see a specialist only to be denied service because you didn’t have a referral from your primary care doctor? Or maybe you went to a doctor and received a surprise bill because you were considered out of network? These are all common pitfalls that can cause hefty bills and frustrations if you are unaware of the requirements related to your insurance plans network. We wanted to take some time to explain the main features of the most common Medicare network types.
First, what exactly is a network? A network is basically a collection of doctors/specialists and hospitals that have agreed to see patients enrolled in a particular health plan. This network could be based on county, state or region depending on your location and plan. Typically, the insurance company would ‘onboard’ each practice or provider. This in turn allows the provider to bill your insurance company when you go see them for medical treatment. Sounds easy enough right? Unfortunately, as is often the case with insurance, this can be more complicated than you think.
Networks are designed differently and not all are created equal. Some networks may have a much smaller amount of participating providers than others. Some may allow you to go ‘out of network’ while others cover you for ‘in-network’ care only. Some require referrals, while others do not. For the average person who doesn’t navigate the insurance landscape regularly trying to understand these rules can be confusing. With Medicare, we typically see 3 common network types for Medicare Advantage plans (Part C). We’ll explain how these networks work, along with an explanation of Medicare Supplement plans, which technically do not have any networks.
HMO (Health Maintenance Organization)
An HMO is probably the most common type of insurance network out there. It stands for Health Maintenance Organization and sounds like the name implies. “A type of health insurance plan that usually limits coverage to care from doctors who work for or contract with the HMO. It generally won't cover out-of-network care except in an emergency. An HMO may require you to live or work in its service area to be eligible for coverage. HMOs often provide integrated care and focus on prevention and wellness.” https://www.healthcare.gov/glossary/health-maintenance-organization-hmo/
Your doctor, along with others, would ‘opt in’ to the Health Maintenance Organization as a participating provider. This network of doctor’s would be responsible for managing and coordinating your care. In theory, this allows your healthcare team to communicate with each other to effectively manage your healthcare.
Some key things to know about HMO plans:
Referrals are REQUIRED: This means, if you want to see a specialist, you’ll need a referral from your PCP first.
Out of Network Coverage = NOT COVERED: Typically with an HMO plan you must stay in the network for the service to be covered. If you want to go out of the network you will have to ask permission from the insurance company and may not be covered.
Typically lower premiums: Since HMO plans are more restrictive and focus on preventive health, premiums are typically lower on HMO plans.
HMO-POS (Health Maintenance Organization - Point of Service)
Another common network type we see is an HMO-POS. This type of network includes all of the same features as an HMO plan mentioned above. It adds to that with the Point of Service aspect. What does this do? Point of Service allows you to go out of network, typically without a referral. This can be beneficial for folks who receive their routine care locally, but want the option to travel in case of a major emergency or diagnosis.
Some key things to know about HMO-POS plans:
In Network Referrals are REQUIRED: Even though HMO-POS plans may allow you to go out of the network with no referrals, you typically need a referral to see In Network specialists unless specifically noted otherwise by the plan.
Out of Network = Higher Cost: While you can go out of network, you typically pay a higher out of pocket cost to do so.
Higher Premiums: Due to the greater flexibility you get with an HMO-POS you would typically pay a higher monthly premium.
PPO (Preferred Provider Organizations)
Another very common network type is a PPO or Preferred Provider Organization. These types of networks have some similarities to HMO plans with some key differences. A PPO network is defined as: “A type of health plan where you pay less if you use providers in the plan’s network. You can use doctors, hospitals, and providers outside of the network without a referral for an additional cost.”
PPO plans also have a network of doctors who ‘opt in’ to the plan. With a PPO you can go outside of that network without a referral for a higher cost. However, PPO’s have more flexibility in terms of national coverage and being considered in network.
Let’s use this example:
Insurance Company A has a PPO plan available in States 1 and 2. An individual living in State 1 signs up for Company A’s PPO plan. While that individual is traveling in State 2 they get sick and need to see a doctor. If the doctor in State 2 participates in Company A’s PPO network, the patient will still be in network. (*This is a simple example/explanation, but generally how PPO networks work.)
In essence, the service area for a PPO can span multiple states or be national, where an HMO plan has a service area based on county, state or region.
Some key things to know about PPO plans:
Referrals are NOT required: PPO plans do not require referrals for in or out of network specialist care.
Out of network = Higher Cost: When out of network you do typically pay a higher cost.
Higher premiums: Since PPO plans have the greatest flexibility, they typically have the highest premiums.
Medicare Supplement Plans
If all the HMO, PPO talk has your head spinning and longing for simpler times, a Medicare Supplement plan might be exactly what you’re after. With Medicare Supplement plans there simply are no networks. The only requirement to receive care is that your provider/hospital accept Original Medicare or Medicare assignment. Medicare Supplement plans allow you to access any doctor or hospital nationwide regardless of the insurance company where you purchased the Supplement plan from. What does this mean in practice?
If you sign up for a Supplement plan with Company 1 and see a provider who works with Medicare but not Company 1, you can still see that doctor simply because they take Medicare. We’ll spare you the boring details on why this is but it has to do with billing and coordination of benefits. The short answer, Medicare Supplement plans give you the most flexibility in terms of provider choice.
Some key things to know about Supplement plans:
Referrals are NOT required: Since there are no networks, referrals are not needed.
Costs are Universal: Your costs will not change from provider to provider, but may change based on service and plan. (If your Supplement plan has co-insurance costs may vary)
Higher Premiums: Supplement plans are typically much more expensive on a monthly basis than network based Advantage plans. They also do not include extra benefits or drug coverage.
Seeing these network types listed like a long forgotten military code language can cause more confusion in an already confusing area. We help folks navigate these options everyday and find the right coverage for their specific needs. If you or a loved one is gearing up for a transition to medicare we’d be happy to help demystify the process for you. Please let us know in the comments below if you found this blog post helpful or contact us directly at 401-404-7373 or by email at help@doctorschoiceusa.com. As always, thanks for reading!