Networks and Formularies
Your health insurance benefits, whether you have an employer group plan or a policy that you purchased yourself, have requirements concerning the doctors and hospitals that you use and the way that prescription drugs are covered. The NETWORK of providers and prescription drug FORMULARY are areas that insurance companies have changed as they look for ways to control medical costs.
Each insurance company has either developed their own network of doctors, hospitals, and ancillary providers or they contract with an existing network for these services. In some instances, an insurance company offers multiple networks based on location or based on the health insurance product that you purchased. The terms “limited network”, “narrow network”, or “skinny network”, are used to describe health plans that offer a limited number of doctors and hospitals that the policyholder can access; in exchange for a lower premium or higher level of benefit. An example of this is the health insurance offered by Coventry to individuals (not employer group plans) that live in Lancaster County. The 2015 benefits utilize the St Elizabeth Regional Medical Center hospital and the physician network that is associated with St Elizabeth Hospital. The Nebraska Heart Hospital is also included in the network. Policyholders must use the doctors and hospitals within the St Elizabeth network. Since St Elizabeth is affiliated with CHI, providers within the CHI network in other areas of Nebraska can also be used. There are no out-of-network benefits.
A formulary is a list of prescription drugs that identifies how each drug is covered under a policy. Typically, the drugs are categorized as Tier 1 through Tier 4 with Tier 1 being the lowest cost generic medications and Tier 4 being the highest cost name brand drugs. Health insurance policies are designed to encourage the use of generic drugs and minimize the use of high cost name brand drugs. Many plans offer very low co-pays for generics while penalizing the use of name brand drugs by requiring the payment of a deductible of $250 to $1000. Step therapy is also required on many medications. This means that the more expensive name brand drug will not be covered by the policy if there is a generic drug available. The name brand drug will be covered only if the policyholder can demonstrate that the generic medications are not satisfactory.
Even if you kept the same policy that you had in 2014, you need to be aware of any network or formulary changes that will impact your benefits. Do not assume that it is the same as last year. The website of your insurance company offers Provider Search and Formulary Search tools.
by Chris McPike, Vice President
402-488-5100
www.comproins.com