Health Insurance: Understanding Your Health Plan’s Rules

What are managed care plans?

Managed care plans are a type of health insurance plan. If you have insurance through your employer, you probably are in a managed care plan. If you are in Medicare, you might be in a managed care plan too. You can’t always tell from the name of the plan. The 3 basic types of managed care plans include the following:

Each type of managed care plan has different rules. When you signed up for your insurance plan, you agreed to its rules. You were probably given a packet that describes the kind of coverage you have. To avoid misunderstandings about your coverage, you need to read the rules of your insurance plan. For most plans, the important rules fall into the following groups:

• Health maintenance organization (HMO)
• Point of service (POS) plan
• Preferred provider organization (PPO)

Rules for selecting doctors and hospitals

Managed care plans sign contracts with certain doctors and hospitals who agree to care for their plan members, often at reduced costs. Your plan may refer to them as providers. This group of providers is often called the plan’s network. Like you, they have agreed to follow the plan’s rules. If you have an HMO, your insurance company might not pay for you to go to a provider who is not in its network. If you have a POS plan or a PPO, the insurance company will probably pay for you to use a provider outside your network, but it will pay less than it would if you visited an in-network provider. In either case, you are responsible for the part of the bill that the plan doesn’t pay.

Even if your doctor is part of the plan’s network, he or she may prefer to send patients to a hospital that isn’t in the network. Because this can be more expensive, ask whether your doctor can send you to a hospital in the network. If that isn’t possible, ask the insurance company whether it will approve your use of the out-of-network hospital. If no other arrangements can be made, you might have to see another doctor.

Rules for seeing specialists

HMO and POS plans won’t pay for you to see a specialist unless your primary care physician (usually your family doctor) thinks it is necessary. If you see a specialist without a referral, you might have to pay more for the care you receive. If you have a PPO, you do not necessarily have to have a referral from your primary care physician in order to see a specialist.

Rules for getting expensive services

If your doctor decides that you need to go to the hospital, have surgery or have certain tests, your insurance company may refuse to pay for the service unless it can preauthorize the treatment (approve it beforehand).

Rules for medicines

Almost every managed care plan has a drug formulary. A formulary is a list of prescription medicines that your health plan has approved. If a drug isn’t on the formulary, you’ll probably have to pay more for it. Your insurance company can give you a list of drugs that are on the formulary. If necessary, show the list to your doctor when he or she writes you a prescription.

For more information

Working with your managed care plan can be confusing, but remember that you can always call your insurance company for help.

Source: Information adapted from “Understanding Your Health Plan’s Rules.” This publication is available through the Internet (http://www.aafp.org/fpm/2001/0900/p27.html).