Analysis: Out-of-pocket costs rising for PPO plans

Many consumer choose health plans that provide coverage for out-of-network services due to their flexibility and price cap on out-of-pocket expenses, but 45 percent of the silver-level preferred provider organization (PPO) plans coming to the market for the first time in 2016 provide no annual cap for policyholders' out-of-network costs, according to a new analysis by the Robert Wood Foundation.

In the analysis, Katherine Hempstead, Ph.D., who leads the foundation's work on health insurance coverage, finds that the PPOs that will not have a cap on out-of-pocket costs in 2016 could mean an average cost of $16,700 for out-of-network services for people signed up for the silver plan. This is a sharp increase from the $14,500 average out-of-pocket cap from 2015. Additionally, among plans that are new to the market in 2016, the average out-of-network maximum out-of-pocket cost (MOOP) was $17,900. For 25 percent of plans on the market in 2016, the MOOP was greater than $19,000.

In addition to average out-of-pocket costs increasing for new silver plan PPOs in 2016, there is a notable reduction in PPOs offered in 2016 as compared to 2015. In addition, a recent Kaiser Health News analysis found that the average premium for the least expensive silver plans for a PPO jumped 17 percent for 2016.

Price transparency has been an issue with ACA plans, as there is no law that caps out-of-pocket costs that insurers can charge for out-of-network services for their customers. Because of this, the amount that consumers are billed for out-of-network services varies greatly by state, leading some states have put laws into place that require insurers to provide information on their websites that detail plans' coverage inclusions and exclusions for consumers at the time of enrollment.

"These changes are ostensibly being made to preserve affordability for marketplace products, which consumers have repeatedly indicated they value most," Hampstead said in her analysis. "However, it remains to be seen to what extent consumers will continue to be willing to trade access to providers for lower premiums."

To learn more:
- here is the Robert Wood Foundation analysis (.pdf)

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