Health Insurance Alert: The New Tier Program for Payment

There are  new insurance plans on the market that are being advertised as a way to reduce healthcare cost and allow consumers to be in charge of their healthcare expenses. It is called a tiered program.  It is modeled after the prescription medication plans where generic medications have the lowest copays and brand name the highest.

In these new insurance plans, doctors and specialty centers are rated by cost. Hospitals and medical professionals that negotiate a lower rate of reimbursement will have a lower deductible, copay and coinsurance payment for the consumer.  If a consumer chooses one of these plans, then the premium is lower although the annual deductible may still be high.  The idea is to keep consumers closer to home with hospitals, primary care and specialists.

In the past, there was in network and out of network. Medical professionals and facilities needed to be credentialed and contracted with the insurance company to be in-network.  If the provider was not credentialed with the insurance company, they were out of network.  With the tier program, the medical professional and facilities need to be credentialed but the insurance company then places them in a certain tier.

Here is how it works in real time.  If you were to get an MRI at a local hospital, the amount towards the deductible would range from$50-75.00.  If you go to a specialty hospital with a reputation of excellence and possibly where your doctor is, the cost toward the deductible would range from $450-600.00.  This is just the deductible and coinsurance and copays would still apply.

On the surface, it does give the consumer some leverage and involvement in decision making.  It will work best if the consumer never leaves the local area.  What happens if there is a need to seek assistance outside the local area?  For instance, I had a client who was misdiagnosed for a cancer at a local hospital and proceeded to go to the cancer specialty center in the nearest city.  Technically, my client would now be in a higher tier of payment with higher  out of pocket costs.

I am already finding clients not understanding what they have signed up for. I usually get a call when the insurance explanation of benefits arrives and the out of pocket deductible applied to the bill is much higher than usual.  One of clients asked me, “why didn’t the hospital or doctor tell me they were more expensive and tell me to go locally.”

I don’t think most medical and allied professionals understand the ramifications of this new insurance.  In the past, if prior approval was given and the facility or doctor was contracted with the insurance, there was no problem.  Now, it can be a problem.  Should the medical professional be responsible for giving this information?  It would be helpful to the patient but the idea of this plan is the consumer takes charge and makes the decision.  This implies the consumer has to be aware of the breakdown of each tier.

I encourage everyone to read their benefits booklet and know what the the cost and coverage is.  It is the consumer’s responsibility not the facility or provider.  Be aware, if you pick this plan what the potential ramifications are to your pocketbook if you have to use a higher tier.