FEHB Plan Cost Controls

p> Plans engage in many forms of cost control. All plans now use networks of preferred providers, who agree to accept lower fees and avoid unnecessary utilization. All plans also engage in other measures, such as second opinions before surgery, penalties for non-emergency hospital admissions without a "preadmission certification," prior approval of expensive services or products, case management, or a combination. Some cost control measures, such as second opinions before elective surgery, are good for both you and the plan since neither wants you to have an unnecessary operation. Another "win-win" measure is high discounts on generic drugs that are therapeutically equivalent to name brand drugs. Others pose problems if you are not careful.

In the national PPO and FFS plans, there is a $500 penalty for any non-emergency hospital admission without a "preadmission certification." HMOs normally refuse to pay for unauthorized admissions. This means that you must obtain permission from the plan, not just your doctor, before you enter a hospital. Likewise, with the major exceptions of routine visits and emergencies, many plans do not pay for expensive care that is not approved in advance by the plan. Such requirements have often been expanded to "specialty" drugs for cancer or other diseases. Plans also use "case management" to reduce expenses in costly cases. For example, if you have a stroke, the plan may authorize extra home health benefits in lieu of prolonged hospitalization. This can benefit you as well as the plan, but you must use the procedure specified by the plan.