The Mayo Clinic is often praised in the world of health care for doing a great job at low cost. So why is the Mayo Clinic being excluded from health-insurance plans?

According to this article from The Pioneer Press, at least two health-insurance carriers have chosen to sell plans with lower premiums that put Mayo out of network – meaning that people have to pay more.

The cause is simple. By Minnesota standards, according to the article, Mayo is more expensive than its peers.

When a health insurance plan is put together, the insurer and the provider (doctor, hospital, clinic, whatever) have a conversation about what the provider charges and what the insurer will pay. The conversation results in a contracted rate that covers the provider’s payments from the insurer over the term of the contract – say a year or two, perhaps with an evergreen renewal clause, and perhaps not.  Or the two fail to agree, and the provider is out of network.

The insurer then can offer plans with various reimbursement rates to employers, other group carriers or individuals. The employer or group carrier might choose to save money by having more expensive and  less expensive plans, or by writing into the plan higher deductibles, or higher co-pays, or a smaller group of in-network providers. The individual buying the insurance plan will then have choices to make as well – would you pay hundreds or thousands of dollars more?

The negotiations can be complicated: insurance companies generally hope to pay less; providers would like to be paid more. A multi-partner doctor group or a prestigious provider like the Mayo Clinic can drive a hard bargain. An individual doctor or a small group tends to have less bargaining power.

In this case, while Mayo Clinic patients in Minnesota seem by and large to be happy, they may increasingly be paying out of pocket. To get a fuller picture, don’t miss the comments.

(P.S. My favorite source of medical information online is Symptom checker, advice for the appointment, drug information: you name it, it’s there, in clear, readable prose.)

Jeanne Pinder

Jeanne Pinder  is the founder and CEO of ClearHealthCosts. She worked at The New York Times for almost 25 years as a reporter, editor and human resources executive, then volunteered for a buyout and founded...