by Ed Gaelick, CLU, ChFC, PSI Consultants
How can those covered by a health plan protect themselves from unexpected out-of-pocket costs? Understanding your benefits and the “system” will certainly reduce the chances of costly surprises.
You also need to understand the term “balance bill.” This is when a provider sends you a bill for amounts not paid for by an insurance company. For in-network providers, this could be unpaid copays, deductibles and coinsurance. For out-network providers, it could be deductibles, coinsurance and amounts above what is considered usual, customary, reasonable (UCR) charges. This amount can be shocking and billed amounts above UCR do not count towards plan out-of-pocket limits.
Here are several helpful tips:
Prior authorization, also known as pre-certification, is the approval an insurance carrier gives a member and provider in order for certain services to be considered covered charges before they are performed. Without prior authorization, a member may be subject to greater out-of-pocket expenses because benefits could be reduced or even denied.
What services require prior authorization?
Generally speaking, non-emergency hospital-related services, surgery, behavioral health, alcohol/substance abuse, advanced radiology/imaging services and some prescriptions require prior authorization. However, each carrier’s guidelines are different. Members should refer to their Benefit Booklet/Certificate or call Member Services for verification before services are performed.
In the simplest terms, health insurance plans can be broken down into two categories: 1) Network Only Plans or 2) Network and Non-Network Plans.
Network Only Plans such as an HMO or EPO cover eligible services when they are performed by a participating provider. Such providers agree to contracted rates so you would only be required to pay for your cost share responsibility (e.g., copayment, deductible, coinsurance). You may not be balance billed beyond that. If you choose to go outside the network, you would responsible for 100 percent of the total charges unless you experience a true emergency.
Network and Non-Network Plans such as a POS or PPO offer you the freedom to choose any provider you want. This means that you would have some level of benefit for eligible services regardless of a provider’s network affiliations.
As with Network Only Plans, participating providers agree to contracted rates. However, non-participating providers have no such agreement with a carrier.
For example, let’s say a sick office visit costs $200. A Network provider may accept a contracted rate of $100. Depending on the benefit level, you would only be responsible for $100 or possibly less if your plan only requires a copayment. A Non-Network provider could charge you the full $200, but only a portion may be applied to your deductible. So what happens to the rest?
Because Non-Network providers are not contracted with a carrier, they can charge whatever they deem appropriate. In order to control expenses, carriers use various formats to calculate non-network payment levels. Some of the most common methodologies include:
• A percentage of Medicare approved charges ( i.e., 110 percent, 140 percent)
• Maximum Allowable Charge (MAC) which typically matches the In-Network payment level
• UCR – A third party vendor determines usual, customary and reasonable amounts for services rendered in a specific geographic area for a specific treatment
Any amounts balance billed above the non-network payment level are not factored into your Non-Network deductible or maximum out-of-pocket. This exposes you to greater out-of-pocket expenses when using non-participating providers.
TIP: Most people will ask a provider if they “take my insurance.” Many billing offices will submit a patient’s claim even if they are not contracted with a carrier. So they will “take your insurance” but it will be a Non-Network charge. So if you have an HMO or EPO (In-Network Only) 100 percent would be out of pocket! The correct question should be: “Do you participate with my network?” Be sure to reference the network’s name as many carriers will have more than one available to their members.
While using Network providers will minimize your out-of-pocket exposure, you may prefer to seek services from a Non-Network provider. Here are some cost saving ideas that you should consider:
• Ask the provider if amounts above the non-network payment level will be “forgiven”
• Negotiate with the provider to reduce the balance
• Submit an appeal to the carrier with additional information to substantiate the higher charge
Having a discussion with your provider about billing practices beforehand should avoid “sticker shock” when you receive your bill. Be sure to ask for written confirmation of your responsibility if an agreement is made with your provider.
Ed Gaelick is a Chartered Life Underwriter and Chartered Financial Consultant with PSI Consultants in Glen Rock. He may be reached at moc.s1545138372tnatl1545138372usnoc1545138372-isp@1545138372de1545138372 or (201) 445-5013.
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