Shrinking Out-of-Network Benefits
Many people don’t have reason to think about the out-of-network benefit in their health plan. They understand that they will pay more if they use a physician or facility that is not part of their plan’s network but expect to be reimbursed for a large part of the expense.
A woman came to us after she had surgery in New York last summer. The out-of-network orthopedic surgeon’s charges were $68,046. Her plan paid $3,221. She never expected such a miniscule reimbursement which to date remains in dispute.
Although not common, hospitals can also be out-of-network. Years ago, a client came to us whose husband had a $305,000 hospital admission. The Plan paid $155,000 and the client owed the deductible, coinsurance and the difference between the $305,000 and the $155,000.
The out-of-network benefit is important because otherwise there is no benefit outside the network. But remember, when you are out of network, there is no contractual relationship between your plan and whoever is providing the service. That means that theoretically the service provider can charge any amount, even one that is unreasonable.
For many years out-of-network reimbursement was based on what was called “usual and customary” fees. Several years ago when Andrew Cuomo was Attorney General of New York, his office brought suit against UnitedHealth Group and Ingenix, their subsidiary which compiled the data used to set these rates. The objective was to force insurers to increase out-of-network reimbursement. However, most plans moved to reimbursing a percentage of Medicare rates with some reimbursements as low as 110% of Medicare, thereby substantially reducing out-of-network reimbursement.
What can you do to protect yourself? First, check to see who is in-network. Of course, if you have been seeing a physician who is out-of-network but your medical bills have been modest, then it’s likely charges have been reasonable. If a physician, particularly a specialist you want to see, is not in-network, a good starting point if you are concerned about balance bills after insurance pays would be to ask if he/she will accept the in-network rate or whatever your plan pays. If you are anticipating having an expensive procedure like surgery, you should determine the following:
What codes does the doctor anticipate using?
What charges will be associated with those codes?
What will your plan reimburse?
Of course, this work can be a project but if there’s a substantial gap between what will be charged and what the plan will pay, you might choose to try and negotiate with that provider or find a different doctor. To find out after the fact and then have to go through an appeal process is not advisable.