PREFERRED PROVIDER OPTION AVAILABLE TO MEMBERS

Updated February 2006

On January 1, 2001, new preferred provider (PPO) benefit plans became available. The PPO plans contain a hospital preferred provider benefit.

Important features of the preferred hospital plans include:

• If you receive care from a preferred hospital, you will receive your maximum benefits under your plan. If a preferred hospital is not available within a reasonable distance of where you live, benefits for hospital care (within that area) will be the same as if you had received care from a preferred hospital. Benefits are paid at an 80% of usual and customary charges once your deductible is satisfied. After you have paid charges equal to the out-of-pocket expense limit, ACHIA will pay at a 100% benefit instead of 80%.

• If you choose not to receive care from a preferred hospital that is within a reasonable distance of where you live, hospital benefits are reduced and ACHIA pays only 60% of the usual and customary charges once you have satisfied your deductible. After you have paid charges equal to the out-of-pocket expense limit, ACHIA will pay at a 100% benefit instead of 60%.

• If you need treatment outside of Alaska, there is an extensive network of preferred hospitals.

• The Traditional Plan and the Medicare plans do not include the hospital preferred provider features. However, in most cases, Traditional plan members will have lower out-of pocket costs if they use preferred hospitals.

In Alaska, the only two ‘preferred’ hospitals are Providence in Anchorage and Valley Hospital in Palmer. However, due to distance issues, the only hospital treated as an out of network hospital is Alaska Regional. If you are seeking treatment outside of Alaska, please consult the NPPN network at 800-557-1656 for in network providers.

Following are a series of questions and answers that should address most of your concerns. However, if you have further questions, please call 1-888-290-0616.

What is a PPO?
In ACHIA's case it is a hospital only provider network. This means that benefits paid under your ACHIA plan for hospital care will be greater (80% coinsurance after deductible), if care is received at a designated preferred hospital compared with care received at a hospital not identified as preferred (60% coinsurance after deductible). Physician and other medical benefits are unaffected by the change to a hospital PPO benefit. In addition, the cost of care at identified preferred hospitals should be less than at a hospital that is not preferred because the plan administrator for ACHIA has negotiated discounted rates with preferred hospitals. Network hospitals are available nationwide as well as in Alaska.

Why should I choose a PPO plan?
The administrator has arranged for discounted services at preferred hospitals. The charge for care that you receive at preferred hospitals should cost less and therefore, the portion of the costs that you are responsible for will be less as well. So, by using a preferred hospital both you and ACHIA can save money. When ACHIA saves money, we are able to hold the cost of premiums at a lower level than if costs are higher. Therefore, you benefit both immediately and in the long term.

Why was the PPO option implemented in 2001?
The Alaska legislature adopted changes to the ACHIA plans to allow the creation of PPO plans. Because of the serious medical conditions of most of the ACHIA members, health care costs are very high. Controlling the high cost of health care for members is critical to assure that the ACHIA plan can continue to provide a valuable benefit to Alaskans. The discounted rates that the plan administrator has negotiated with preferred hospitals will help to reduce the high costs experienced by ACHIA as well as ACHIA members.

What if there are no preferred provider hospitals in my area?
A significant number of ACHIA members live outside the preferred provider service areas. Members living in areas that are not within a reasonable distance of a preferred hospital will continue to receive 80% coinsurance benefit after the annual deductible until they reach the out-of-pocket limit. If a member that lives in an area that is not within a reasonable distance of a preferred hospital, and the member chooses to be treated in a city which has a preferred provider hospital, the member must receive treatment from one of the preferred hospitals in order to receive the 80% coinsurance benefit.