2016 Florida Healthcare Rates Raise A Question: Where Did The PPOs Go?

Sep 11, 2015

Florida Office of Insurance Regulation released 2016 rate information for ACA-compliant plans. Prices are going up, but PPO's won't be sold to Floridians using subsidies.
Credit Florida Office of Insurance Regulation / State of Florida

Florida’s health insurance market for next year is beginning to take shape, and there will be cost increases. But  that’s not what’s raising eyebrows. In Florida, managed care health plans will dominate the market place, and the emergence of a new system  has some wondering, what is an EPO?

First the bad news. According to Florida’s Office of Insurance Regulation, healthcare costs will rise an average of 9.5 percent next year. Now, the good news: many consumers won’t pay that.

“These average Florida family will not see a 9.5 percent increase. Nothing near it," said Gregg Mellowe, Director of Health Research and Analysis for the liberal-leaning Florida Center for Fiscal and Economic policy.

Most families shopping on insurance exchanges qualify for federal subsidies to offset the cost.  The state recently went through a period of rate setting, looking at what health insurers asked for and approving or denying their requests. In some cases, the state gave a company more than what they wanted. In others, they got less. At least four companies saw prices go down. Florida’s 9.5 percent average rate hike may sound like a lot, but Mellowe says it’s actually on par with national trends.

“Prior to the ACA, double-digit increases were the norm. It certainly does not reach or surpass what we’ve seen in prior years. And that number [9.5 percent] is more about what insurers are charging than what consumers are paying," he said.

And Laura Brennaman, Policy Director for the healthcare consumer advocacy organization Florida Chain, believes Florida’s Insurance office did a good job.

“It appears they used sound actuarial standards," she said. "Based on the way they required companies to increase more than they expected and didn’t allow some to increase as much as they wanted, and it was the same on the companies that requested decreases.”

A major change Floridians using the exchange will see next year is the absence of Preferred Provider Network plans. PPOs tend to be more expensive, but they also come with flexibility for consumers on which doctor to choose, which specialist, and coverage if they go out of network. Taking their place are EPOs or exclusive provider organizations, which the Kaiser Family Foundation’s Cynthia Cox explains:

“I’d say about half the products offered [nationally] are an HMO or EPO. They’re similar in that you have an exclusive network of providers to choose from. EPOs are sometimes more flexible than HMO especially for people who want to see a specialist and don’t want to have to go through their primary care physicians to do so.”

Cox is the Kaiser Foundation’s Associate Director of Health Reform and Private Insurance. EPOs are a hybrid of PPOs and traditional managed care plans—where patients are steered to a doctor, healthcare is carefully tracked and costs tend to be lower. But not everyone believes the disappearance of the PPO in Florida is a good thing.

“The goals of the ACA was three-fold:  increase access, decrease cost and improve health outcomes. The way the way the insurance plans can decrease cost and reduce the premium cost is by narrowing the network," said Florida Chain's Brennaman.

The narrow networks can also lead to fewer choices for consumers when it comes to doctors, and even prescription medications. Also with EPOs if a person ends up in the hospital and gets an out-of-network doctor, they may have to pay for that treatment in full. An expense not many people can afford.

One way consumers can avoid price jumps, is by switching health plans. But there are also growing concerns consumers will grow weary of having to switch insurance plans each year in order to avoid cost increases.  

“Changing doctors is a bigger deal than changing auto mechanics for most people," said Kaiser's Cox.

She says a switch in plans could also mean having to switch doctors, pharmacies and a tangle of paperwork.

“It can be a hardship for some people, particularly people who are sicker, or those who need a specialist. So you may not always be able to see your doctor in the lowest-cost plan and you may have to go to a higher priced plan to make sure your doctor is included in that network.”  

Those will be the consumers who could see the price they pay for insurance rise.