Are Patients Limited to Certain Providers on HSA Plans?

This column is an excerpt (Question 7) from a book to be published later this year to help guide account owners, employers, benefits managers, and administrators understand Health Savings Account compliance issues. The format consists of a common question, an explanation in easy-to-understand English (often with an appropriate example), and citation from government documents to support the answer. The book is designed to inform. It is not a legal document, and the contents should not be construed as legal advice.

Question: Does an HSA-qualified plan restrict which doctors or facilities I can see to receive care?

 Answer: It may or may not. Insurers build their HSA-qualified plans on standard product chassis like an HMO, PPO, or POS plan. Some of these products allow you to receive care outside the network at a reduced benefit level. Let’s take a closer look at these products.

HMO: You’re limited to the insurer’s network of contracted providers of care except when you need urgent or emergency care. Most HMO plans require that you choose a primary-care physician (PCP), who counsels you on how to stay healthy, treats simple conditions, and coordinates your care with specialists. In many cases, you can arrange specialty care only through referral from your PCP. Some plans, though, allow patients to self-refer within the HMO network, so be sure you understand how your plan works. The more freedom you have, the more power you have to control the quality, convenience, and price of your care.

An HMO usually has a lower premium than other plans with similar benefits and cost-sharing. Contracted medical providers are usually responsible for working directly with the insurer to authorize care, so you won’t receive unauthorized care for which you’d be financially responsible.

One disadvantage is that you can’t always shop for care. Your PCP’s medical group may limit your access to doctors and facilities outside her medical group’s referral circle, especially if the group’s reimbursement encourages them to keep care within their facility. And you can’t see providers outside the insurer’s network except for urgent or emergency care. Your only option to receive care outside your PCP’s referral network may be to choose a new PCP – either temporarily or permanently – who refers patients to your preferred specialist or facility. Switching PCPs may be a burden. And it may be difficult if you live in an area with primary-care shortages. But it’s an option if you want to receive care through a particular specialist or at a certain facility.

 Example: You suffer from what your PCP believes is plantar fasciitis. Your PCP will probably refer you to a podiatrist within her practice group. In contrast, if you’re pregnant and your baby is diagnosed with a fetal heart condition requiring in utero surgery, your insurer most likely will identify the appropriate surgeon and send you there, whether or not the surgeon and facility are in the network.

 PPO: A PPO is the ideal HSA-qualified plan. You don’t designate a PCP (though you probably have a practitioner on whom you rely for primary care) and don’t have to secure referrals to see a specialist. You can choose where you undergo an MRI, physical therapy, or lab tests, allowing you to shop for the best value when you need this care. And you have a level of benefits when you receive non-urgent, non-emergency care outside the insurer’s network.

The disadvantages are that PPO plans generally have a higher premium, and you face greater financial responsibility when you receive care outside the network.

POS (Point-of-Service) Plan: A POS plan is a hybrid of an HMO and a PPO. It’s called a Point-of-Service plan because you decide at the point that you receive care whether to use your in-network or out-of-network benefit. In most cases, it works like an HMO in-network: You choose a primary-care physician, and that doctor (usually) manages your access to specialty care. And it works like a PPO out-of-network, allowing you to receive care from non-contracted medical providers at a lower benefit level.

If your plan requires referrals to in-network specialty care and you find your PCP’s referral practices too restrictive, you can self-refer to specialists who are part of your plan’s network at the out-of-network benefit level. In that case, the contracted rate that your insurer has negotiated for the service may protect you against balance billing, but not deductibles and coinsurance.

The disadvantage of a POS plan is that you usually don’t have the freedom of a PPO to self-refer at the in-network benefit level. But some POS plans do allow self-referral, so be sure you understand how your plan works.

 Internal Revenue Code, Section 223(c)(2):

 (D) Special rules for network plans. In the case of a plan using a network of providers—

(i) Annual out-of-pocket limitation – Such plan shall not fail to be treated as a high deductible health plan by reason of having an out-of-pocket limitation for services provided outside of such network which exceeds the applicable limitation under subparagraph (A)(ii).

 (ii) Annual deductible – Such plan’s annual deductible for services provided outside of such network shall not be taken into account for purposes of subsection (b)(2).

 See Internal Revenue Code Section 223(c)(2)(C).

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 The content of this column is informational only. It is not intended, nor should the reader construe the content, as legal advice. Please consult your personal legal, tax, or financial counsel for information about how this information applies to you or your entity.

HSA Question of the Week is published every week, alternating every other Wednesday with HSA Wednesday Wisdom and every other Monday with HSA Monday Mythbuster.