Health plan types and dread disease policies

Health plan types and dread disease policies

Health coverage comes in several plan types that trade freedom of provider choice against cost and care management. Separately, some policies do not try to be comprehensive at all: a dread disease (also called specified disease) policy pays only when the insured is diagnosed with or treated for a disease the policy names.

The main plan types

• Traditional indemnity (fee-for-service). The insured may see any licensed provider. The insurer reimburses covered expenses after a deductible, then shares costs through coinsurance up to an out-of-pocket limit. Most freedom, usually the highest cost and the most paperwork.
• Health maintenance organization (HMO). The subscriber prepays a fixed premium and receives care from the HMO's network of providers. A primary care physician usually acts as the gatekeeper who makes referrals to specialists. Out-of-network care is generally not covered except emergencies. HMOs stress preventive care to hold costs down.
• Preferred provider organization (PPO). The insurer contracts with a network of providers at discounted fees. The insured pays less in network but may still go out of network at higher cost-sharing, usually without a referral.
• Point-of-service (POS) plan. A hybrid: HMO-style gatekeeper and network, but the member may choose, at the point of service, to go outside the network and pay more.
• Exclusive provider organization (EPO). Like a PPO in structure, but out-of-network care is not covered except emergencies.

Rule of thumb: the more a plan manages care and limits the network, the lower its cost tends to be; the more choice it allows, the more the insured pays.

Florida HMOs

In Florida, HMOs are regulated under chapter 641, Part I. Florida states a set of subscriber protections that regulators must follow in applying the law. An HMO subscriber should receive:

• care meeting reasonable quality standards consistent with prevailing medical practice in the community;
• care from a broad panel of providers, including referrals, preventive care, emergency screening and services, and second opinions;
• assurance the HMO is independently accredited by a national review organization and is financially secure;
• continuity of care even after a provider leaves the HMO;
• flexibility to transfer to another Florida HMO regardless of health status; and
• eligibility in group plans without discrimination based on health status.

Before the Office of Insurance Regulation issues a certificate to a new HMO, the HMO must pay its special assessment to the Florida Health Maintenance Organization Consumer Assistance Plan. That assessment may not be counted as an HMO asset, and the office may suspend or revoke the certificate of an HMO that does not pay on time.

Florida also limits step therapy in HMO major medical contracts: an HMO may not require a step-therapy protocol for a covered drug if the subscriber was already approved for it through another plan's step therapy and documents that the other plan paid for it during the 90 days before the request.

Dread disease (specified disease) policies

A dread disease policy covers only the disease or diseases named in the policy, most commonly cancer. Benefits are often fixed amounts or scheduled payments triggered by diagnosis or treatment, paid in addition to any other coverage. It is a limited-benefit supplement, not a substitute for major medical coverage, and agents should never present it as comprehensive protection.

Florida's small-employer law draws the same line. Its definition of a health benefit plan covers hospital or medical policies and HMO contracts, but excludes accident-only, specified disease, individual hospital indemnity, credit, dental-only, vision-only, Medicare supplement, long-term care and disability income insurance, along with similar supplemental plans designed to fill gaps in an underlying plan.

Comprehensive plans and essential health benefits

Florida lets a health insurer or HMO create a new individual or group policy or contract that includes at least one service in each of the 10 essential health benefits categories required under federal law, drawing those services from the benchmark lists of any one state or several states.