Disappearing PPOs, Narrowing Coverage Consequences of Affordable Marketplace Coverage

There has been a a significant reduction in the number of Preferred Provider Organization (PPO) plans—health insurance products offering a relatively broad provider network, as well as coverage for some use of out-of-network providers –offered in Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) health insurance marketplaces, according to an article by Katherine Hempstead, PhD, of the Robert Wood Johnson Foundation.  In addition to the diminishing number of PPOs, the reduced scope of such plans is also becoming an issue. In 2015, 131 carriers offered silver PPO products. In the 2016 marketplace, only about one-third remained unchanged, with the remaining plans either reduced in scope or eliminated.

Because PPOs are not defined by strict standards, plans can show significant variation in coverage for out-of-network care, cost-sharing, and the breadth of the provider network. The extent of out-of-network coverage does not affect the actuarial value (AV) of a plan, so carriers may adjust coverage without affecting AV status. Compared to PPOs continued from last year, plans new to the market offer less out-of-network coverage.

Maximum out-of-pocket costs

When utilizing out-of-network coverage, PPO members are responsible for higher cost sharing,  usually including a separate out-of-network deductible. There may also be an annual maximum out-of-pocket cost (MOOP), which can have major implications for the ability to access out-of-network providers. Hempstead noted that the ACA requires MOOPs for network coverage, but not for out-of-network coverage. Protection against large provider bills is reduced in the absence of an out-of-network MOOP, which can, in turn, affect the insured’s decision-making process when seeking medical care.

In the 2016 marketplace, there was a significant decline in the prevalence of out-of-network MOOPs in PPOs–only 14 percent of PPOs offered in 2015 lacked MOOPs, compared to 45 percent of those newly offered in 2016.  Additionally, the annual cap has increased between 2015 and 2016, increasing from $14,500 to $16,700, with the average out-of-network MOOP for new plans in 2016 falling at $17,900. For 25 percent of 2016 plans, the MOOP was greater than $19,000. Plans remaining on the marketplace between 2015 and 2016 showed an average MOOP increase of $1,000.

Carrier participation

National carriers are offering limited numbers of PPOs in 2016. No major national carrier offered PPOs in more than 4 states in 2016, and most continued plans from 2015 and did not introduce new plans. No national carrier entered a new state and offered a PPO in 2016. Non-profit Blues plans and for-profit Anthem Blue Cross/Blue Shield plans dominate the remaining PPO market, despite the discontinuation of PPO offerings by several Blues plans.

Conclusion

Hempstead concluded that the reducing number of PPOs and the narrowing coverage of existing PPOs should be understood to be a part of a broader carrier trend intended to reduce exposure to the higher costs of out-of-network providers. A closer look at networks may reveal an increased tendency to exclude higher-priced providers from networks might become apparent. These changes are largely being made to preserve affordability for marketplace products, as this is what consumers have indicated they value the most.