Obamacare in Kentucky — as in many other states — has been plagued by rising prices and fewer health insurance plan options. Now that the open enrollment period is underway, customers also are finding that their health provider networks are shrinking.

That means that they may no longer be able to go to their family doctor — unless they want to bear the entire cost of the visit by themselves. Louisvillians also will lose access to doctors in Indiana and Ohio — unless they get a special exemption.

Griffin Meredith

Griffin Meredith

Anthem — the only health insurance provider that is offering individual plans in all 120 counties in Kentucky next year — said it had significantly expanded its network, but a local insurance broker said some of his customers were angry about reduced in-network options.

While the rising cost of the plans will have a muted impact on most people — federal subsidies will offset much of the higher premiums — the shrinking networks could force people to change doctors, drive longer distances for care and could mean losing access to out-of-state specialists they’ve been seeing for decades.

“There’s going to be some shock to the system,” said Griffin Meredith, president of Commonwealth Insurance Partners, a Louisville-based health insurance broker.

Most insurers — Humana, Aetna, Baptist Health — have abandoned Kentucky’s exchange altogether, and of the few that remain only Anthem is offering insurance plans on a large scale. But Anthem is changing the types of plans it is offering, which is affecting how people can use their insurance.

PPO vs. HMO

The Indianapolis-based Anthem is dropping some Preferred Provider Organization (PPO) plans in exchange for Health Maintenance Organization (HMO) plans. PPO plans generally provide access to a larger network of doctors and hospitals than HMO plans, but they are also more expensive and come with a higher deductible. If consumers with a PPO plan go outside of the network, they generally incur a penalty: they might have to pay a higher share of the cost, for example. With HMO plans, consumers cannot go outside of the network — unless they pay 100 percent of the cost for that doctor visit or procedure.

Last year, Anthem offered PPO plans in all 120 counties in Kentucky. This year, it is offering PPO plans in 46 counties. In the other 74 counties, customers can only buy HMO plans. Of the company’s 75,000 individual customers in Kentucky this year, 80 percent are on PPO plans.

Anthem said it expected the number of people who choose HMO plans to increase as more consumers balance access to care against the cost of the health plans.

Anthem coverage map for 2017. | Courtesy of Anthem.

Anthem coverage map for 2017. | Courtesy of Anthem.

For residents in Louisville, the requirement to switch from a less restrictive plan to a more restrictive one may not matter a whole lot because of the high concentration of doctors and hospitals that remain in Anthem’s network. Anthem’s PPO plan this year is providing customers access to 15 hospitals in the Louisville area. Next year’s HMO plan will offer access to 12 hospitals here, including Baptist Health, Norton Audubon and Jewish.

In Lexington, the number of hospitals in the network falls from 19 this year to eight next year, and Meredith said that some customers in the Lexington area are complaining especially about losing access to the Lexington Clinic, which, according to its website, employs more than 200 providers, has a staff of 1,000 and claims about 18 percent of the Fayette County health care market.

Meredith said that the Lexington Clinic is one of the strongest and largest providers for primary care in that area, and no plan on the health exchange offers a network that includes the clinic.

That means people who have been going to a family doctor or specialist that is part of that clinic will have to pay either all of the medical costs themselves or find another doctor.

People may be able to afford a primary care physician visit out-of-pocket, but seeing out-of-network cardiologists or allergists would cost the patients hundreds of dollars.

Griffin’s clients from the Lexington area have not reacted well to the news.

“They’re pretty angry,” he said.

Meredith said that people in more rural areas, too, may lose access to their hometown hospital or a local specialist and may instead have to travel to a nearby city if they want to stay within the network.

Meredith said that Anthem and the Lexington Clinic likely are bickering over prices, with the insurer saying that the provider’s prices are too high, and the provider saying that the insurer’s reimbursement rates are too low.

Network is growing

Anthem said that much like in years past, it is making changes to its products based on market dynamics and consumer preference.

Mike Lorch

Mike Lorch

Mike Lorch, the insurer’s regional vice president, emphasized that Anthem is the only insurer that will provide health insurance plans for individuals on the exchanges in all 120 Kentucky counties. For comparison, Louisville-based Humana is offering those plans for next year in only nine Kentucky counties, down from 15 this year.

Lorch said that while Anthem is reducing the number of counties in which it is offering the less restrictive PPO plan and increasing the number of counties in which it is offering the more restrictive HMO plan, it has worked hard to expand the HMO network.

Anthem said that its Pathway HMO plan will include 71 hospitals next year, up from 48 this year.

Lorch said, for example, that the addition of Owensboro Health in Western Kentucky and St. Elizabeth Healthcare in Northern Kentucky eliminated coverage gaps.

Lorch said that if a hospital system meets Anthem’s terms and conditions, which includes reimbursement rates, they can become part of the network. As Anthem tried to expand its network for next year, it reached out to some hospitals to narrow coverage gaps. In other cases, hospitals contacted Anthem to become part of the network.

St. Elizabeth in Northern Kentucky, is a good example, Lorch said, as the system previously had decided not to be part of Anthem’s Pathway HMO network.

“That’s a big system,” Lorch said.

In addition, he said, the Kentucky Department of Insurance looks at insurers’ networks very carefully to make sure that consumers have access to a hospital within 30 minutes or 30 miles.

Filling a coverage gap

Bill Banks, vice president of managed care for St. Elizabeth, said the system includes about 1,200 licensed beds in six facilities, with more than 400 professional health care providers, including about 170 primary care physicians.

Banks said the system includes about 90 percent of the adult primary care providers in Northern Kentucky.

Until now, Anthem simply had not offered a high enough reimbursement rate for the system to be part of the network, he said.

Facilities included in the St. Elizabeth Healthcare system. | Courtesy of St. Elizabeth.

Facilities included in the St. Elizabeth Healthcare system. | Courtesy of St. Elizabeth.

St. Elizabeth is a nonprofit Catholic health system that generates about 70 percent of its revenue from Medicare and Medicaid, Banks said. The government does not pay the full cost for services that St. Elizabeth provides its government patients, he said. And, he said, the system has to provide service for its roughly 50,000 Medicare customers, because without St. Elizabeth, they don’t have another provider where they can get care.

The system provided more than $112 million in uncompensated care and benefits to the community, according to its website.

Bill Banks

Bill Banks

The financial constraints on the government side of the business mean that St. Elizabeth has little wiggle room when it negotiates for reimbursement rates with private insurers.

The system got a few calls from people this year to ask about why the system was not part of Anthem’s network, Banks said.

“It didn’t go over so well with a lot of patients,” he said.

He suspects Anthem got some pushback from its customers in Northern Kentucky, too, prompting the insurer to reach out to St. Elizabeth.

“We did get a phone call saying we’d like to fix this network problem,” Banks said.

While he said he could not reveal details about the negotiations, he said Anthem raised its reimbursement rates to a reasonable level.

The coverage gap was apparent, and the parties completed their negotiations pretty quickly, in about 48 hours, Banks said.