Managed Care/Defined Network Plans

Competition in the health care market has resulted in the development of many new ways to providing and paying for health care services.

Defined Network Plan
Provider Directories
Continuity of Care
Referral Procedure
Second Opinions
Disenrollment

Defined Network Plan

A defined network plan is the term used in Wisconsin insurance law to refer to any health benefit plan that creates incentives for its enrollees to use network providers. Some defined network plans will provide coverage only if the enrollee uses network providers and other plans will pay a larger portion of the charges if the enrollee uses network providers. HMOs, point-of-service plans and preferred provider plans are examples of defined network plans. This type of plan is sometimes referred to as a managed care plan.

Health Maintenance Organization (HMO)

An HMO is a health insurance plan that provides comprehensive, prepaid medical care. It differs from a traditional insurer in that it both pays for and provides the medical care. Persons insured by an HMO plan are referred to as enrollees. An HMO usually operates on a closed panel basis. This means the enrollees are required to seek care from a medical provider who is either employed by or under contract to the HMO.

HMOs limit care to a specific geographic area. Except for serious emergencies or the need for urgent care outside the service areas, the HMO will probably not pay for care enrollees receive from a provider who is not affiliated with the HMO unless the HMO physician refers you to that provider.

HMOs are regulated as insurance companies by the OCI. To do business in the state, an HMO must meet certain financial requirements and abide by relevant insurance laws. OCI must approve policies before they are sold to ensure they comply with state laws.

Information is available on the OCI's Web site regarding licensed HMOs and the counties they serve.

Point-of-Service Plan (POS)

A POS plan is essentially an HMO that allows members to use services provided outside of the network without prior approval from a network doctor. POS plans offer lower deductibles and no coinsurance for visits to doctors inside the network. Visits outside the network normally require the payment of deductibles and coinsurance the same as a standard insurance policy.

Preferred Provider Plan (PPP)

A PPP is a form of managed care closest to an indemnity plan. A PPP has arrangements with doctors, hospitals, and other providers of care who have agreed to accept lower fees from the insurer for their services. A PPP pays a specific level of benefits if certain providers are used and a lesser amount if non-PPP providers are utilized. A PPP must provide reasonable access to network providers in the service area. However, a PPP is not required to offer a choice of participating providers in each geographic area.

PPPs may require that enrollees pay coinsurance of up to 50% for services provided by nonparticipating providers. Enrollees should read their policies carefully before seeking services from nonparticipating providers.

A PPP operates in a certain geographic area, is limited to specific providers, and is regulated by OCI. A PPP that has a provider agreement with a hospital may not have an agreement with every provider who provides services at the hospital, such as anesthesiologists, pathologists, and radiologists.

Many insurers that offer standard health insurance policies also offer some type of preferred provider plan. You should ask your agent to provide you with information on preferred provider plans in your area.

Provider Directories

All managed care plans will provide an enrollee with a provider directory listing hospitals, primary care physicians, and specialty providers from whom the enrollee may obtain services. These directories are updated annually. However, the enrollee should inquire at the time of making an appointment as to whether the provider is currently a member of the managed care organization.

Continuity of Care

If a managed care plan represented a primary care physician (defined as a physician specializing in internal medicine, pediatrics, or family practice) as being available during an open enrollment period, it must make the physician available at no additional cost for the entire plan year. A specialist provider must be made available for the lesser of the course of treatment or 90 days. If an enrollee is in her second trimester of pregnancy, the provider must be available through postpartum care. The exceptions are for a provider who is no longer practicing in the managed care plan's service area or who was terminated from the plan for misconduct.

Referral Procedure

Some HMOs require a referral from a primary care physician before an enrollee can see another plan provider. All HMOs require the enrollee to have a referral that has been approved by the plan before going to a non-plan provider. The certificate booklet includes information on the procedure to follow and any notification requirements.

A managed care plan may not require a referral from a physician for services from a plan chiropractor. It must also allow a woman to receive obstetrical and gynecological services from a plan physician who specializes in obstetrics or gynecology without requiring a referral from her primary care provider.

Managed care plans must have a procedure allowing for standing referrals. A standing referral authorizes an enrollee to be seen by a specialist provider for a specific duration of time or specific number of visits without having to obtain a separate referral from the primary provider for each visit to the specialist.

If an enrollee goes to a non-HMO provider without an approved referral, the claim for those services will not be reimbursed by the HMO. Enrollees have the right to file a grievance when a referral is denied.

Second Opinions

Every managed care plan must cover a second opinion from another provider within the managed care plan provider network.

Disenrollment

An HMO must disclose in the policy and certificate any circumstances under which an enrollee may be disenrolled. Disenrollment proceedings may be initiated only for the following reasons:

• The enrollee has failed to pay required premiums by the end of the grace period.
• The enrollee has committed acts of physical or verbal abuse, which pose a threat to providers or other members of the organization.
• The enrollee has allowed a nonmember to use the HMO's certification card to obtain services or has knowingly provided fraudulent information in applying for coverage.
• The enrollee has moved outside of the geographical service area of the organization.
• The enrollee is unable to establish or maintain a satisfactory physician-patient relationship with the physician responsible for the enrollee's care.

Enrollees have the right to file a grievance when a disenrollment proceeding is initiated.

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