Health insurance carriers, or providers, are the companies or organizations that provide health insurance plans and administer health insurance benefits. Carriers include public health insurance providers like Medicare and Medicaid, as well as private health insurance providers like United Healthcare, Anthem Blue Cross & Blue Shield, Aetna, and Cigna to name a few. Most carriers generally conform to rules set by the Centers for Medicare and Medicaid Services (CMS) that govern how health insurance benefits are administered, so there are many similarities between carriers. However, there are also slight differences that are useful to be aware of.
The most relevant public, or government, health insurance providers are Medicare, which covers Americans 65 years and older, and Medicaid, which covers low income individuals. Other public carriers include the Children's Health Insurance Program (CHIP) and Tricare, which covers uniformed service members, retirees, and their families. Medicare, Medicaid, and CHIP are all administered and governed by CMS, which falls under the United States Department of Health & Human Services (HHS).
Medicare is public health insurance for the elderly. Every American is eligible for Medicare at the age of 65. It is possible to become eligible for Medicare prior to 65 under certain circumstances, the most common of which is experiencing a qualifying disability. Medicare is administered at the federal level. Medicare beneficiaries have the option of receiving their Medicare benefits through traditional Medicare, administered by the government, or through a Medicare Advantage plan, which is administered through a private insurance carrier.
Medicaid is government health insurance for low income populations. Individuals that meet the income restrictions in their state are eligible for Medicaid. Medicaid is jointly funded by federal and state governments but is administered locally by each state, and the benefits and cost-share amounts can vary between states. A significant feature of the Affordable Care Act is the option for each state to expand Medicaid coverage for individuals that earn up to 138% of the federal poverty level (about $15,900 per year). Some states have opted to expand coverage while others have declined. To find out your state's status, click here.
CMS sets rules and guidelines for Medicare, Medicaid, and CHIP beneficiaries as well as all medical providers that choose to participate in any or all of these plans. These rules are extensive and can get complicated, but for now it's good to know that they govern matters such as Medicare eligibility and enrollment, prescription drug coverage, coordination of benefits, how providers are allowed to bill, privacy compliance, reimbursement rates, and quality initiatives. In general, public health plans reimburse medical care providers less than private health plans, which is why some medical providers opt not to participate in public health insurance networks. Patients with Medicare and Medicaid should always ask if a provider accepts their insurance before scheduling an appointment.
Health insurance companies that are not run by the government are known as private health insurance carriers. Private carriers include United Healthcare, Anthem Blue Cross & Blue Shield, Aetna, Cigna, Humana, Kaiser Permanente, Cofinity, and Coventry/First Health to name a few. Some, but not all, private insurers are for-profit organizations. Most private insurers offer Medicare Advantage plans, and as a result, they must comply with many of the CMS rules that we discussed above. However, each private insurer also has its own policies and procedures that cause variation between the carriers, especially in terms of non-Medicare health insurance plans. For example, some carriers have more stringent pre-authorization (aka pre-certification) procedures than others, which can lead to a higher rate of denied claims by those insurers. Also, medical care providers must contract with each carrier individually if they'd like to participate in their network, and each carrier has its own fee schedule that governs reimbursement for services performed on individuals that they cover.
Because providers have to contract with each carrier individually, and because fee schedules differ between carriers, it would be possible to minimize the amount of out-of-pocket costs one would owe by finding the carrier that has the lowest fee schedule. In other words, if two carriers offer plans with the same exact benefits and one carrier pays $100 for a procedure while the second pays $80 for the same procedure, the out-of-pocket cost to the patient would be lower under the second carrier because the carrier's payment to the provider is lower. Also, carriers with less stringent pre-authorization policies are usually easier to work with in terms of minimizing denied or delayed claims and necessary appeals. It may be useful to request fee schedule information and pre-authorization requirements from carriers when purchasing coverage. Also, be sure that your doctor participates in the carrier's network before you choose one of their plans; otherwise, you may be restricted from seeing your physician.
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