Most N.Y. Marketplace Plans Lack Out-Of-Network Coverage

More than a dozen insurers offer plans on the New York health insurance marketplace. Depending on where shoppers live, they may have more than a hundred options to choose from.

But despite being spoiled in many ways, there's one popular feature that most New Yorkers can't find in any of the health plans offered on their state exchange: out-of-network coverage.

Except for offerings by a few insurers in far western New York and around Albany, the only options available elsewhere, including the entire New York City metro area, are health maintenance organization-style plans that cover care provided only by doctors and hospitals in the plan's network. People who go out of network for anything other than emergency care are generally responsible for the entire bill.

Although New York may not be the only place where HMOs are the sole marketplace option for many consumers, the situation there is unusual. According to figures from McKinsey & Co., in 2015 just 1 percent of people who were eligible to shop for coverage on the exchanges across the United States had only HMOs to choose from. Four percent could choose either HMOs or EPOs, the acronym for exclusive provider organizations that, like HMOs, don't generally provide out-of-network coverage for anything except emergencies.

New York officials didn't respond to requests for comment.

A number of factors contributed to the New York marketplace's dearth of alternative plans such as preferred provider organizations that typically have some coverage for out-of-network doctors and hospitals.

New York has a difficult history in the individual insurance market, which includes people who don't buy coverage through work. It's a key reason insurers are wary of offering products with out-of-network benefits.

In 1992, a state law required insurers on the individual market to cover anyone seeking a plan, regardless of their health. A few years later, the state required that two standardized HMO plans be offered in the individual market, only one of which offered out-of-network benefits, says Peter Newell, director of the health insurance project at the United Hospital Fund of New York, a research and philanthropic organization.

But it was difficult for insurers to maintain a customer base that wasn't too costly to cover since healthy people weren't required to buy insurance. "That out-of-network product attracted a lot of high users of medical care, and prices went through the roof," says Newell. Many insurers left the individual market at that time, and because of the high costs, enrollment on the individual market plummeted from more than 100,000 in 2000 to under 20,000 in 2012, according to a study by Health Management Associates for the New York Department of Health.

Following that experience, "insurers are a little gun shy" about offering plans with out-of-network coverage on the exchange, says Newell.

Another requirement has likely discouraged insurers from offering PPO-type plans, says Sabrina Corlette, project director at Georgetown University's Center on Health Insurance Reforms, who has co-authored reports about state efforts to implement the health law.

In New York, the exchange required that any insurer that sold plans with out-of-network benefits outside the marketplace to also sell plans with out-of-network benefits inside the marketplace.

Rather than offering PPOs both on and off the exchange, most insurers opted not to sell PPOs at all. "They were worried about adverse selection, so they only offered HMO-style plans," Corlette says.