Insurance is Complicated
Insurance policies are hard to understand. Even for those of us working in the treatment industry, the insurance terrain is littered with obstacles and no blog would ever be able to satisfy all of the questions that come up when looking for treatment.
That being said, there are a few things about insurance that you should pay attention to – things that can end up costing a fortune if misunderstood. To at least get your foot in the door, we’ve come up with what we think are the three most important questions about insurance coverage, and the answers to those questions.
1. What is the difference between in-network and out-of-network benefits?
“In-network health care providers have contracted with your insurance company to accept certain negotiated (i.e., discounted) rates. You’re correct that you will typically pay less with an in-network provider. Out-of-network, providers have not agreed to the discounted rates.1”
When you go out-of-network, it costs your insurance companies more. Insurance companies will increase your out-of-network costs, like your deductible and co-insurance, to make you go in-network.
For example, if you have a $1,000.00 in-network deductible, your out of network deductible could be at least $2,000.00 -- while your in-network coinsurance could be 80% or even 90%, your out-of-network coinsurance could be as low as 50%.
This can get muddy when speaking with admissions at treatment centers. Be sure to ask whether your insurance is considered in- or out-of-network
2. What is the difference between a deductible and an out-of-pocket max?
Deductibles, out-of-pocket max, copays, and coinsurances are all tied together and can get very tricky. We’ll look at the two most frequent type of plans we see: copay plans and deductible plans. We'll also apply them to the cost of a generic service, service x, billed at $100. As a disclaimer, it should be noted that insurance policies differ in many ways and you should always confirm with your insurance as well as the provider to find out what your payments will look like.
Example One: You have a copay plan with a $40 copay for service x and a $2,500 out-of-pocket max.
With a copay plan, your copays often do not contribute to your deductible – instead they go toward your out-of-pocket max. Before reaching the $2,500 max, you will pay $40 for service x. You will continue to pay $40 until you satisfy your out-of-pocket max of $2,500, at which point insurance will begin covering service x at 100%.
Example Two: You have a deductible plan with a deductible of $1,000, a $2,500 out-of-pocket max, and an 80% coinsurance.
You will pay 100$ for service x for ten visits, until you satisfy your $1,000 deductible (10 x $100 = $1,000). After that is met, your insurance will pay 80% of each visit and you will pay 20% (insurance pays $80 and you pay $20). You keep paying $20 until you reach $2,500, at which point insurance begins to pay 100%.
In some cases, insurances will incorporate a 100% coinsurance after the deductible, leaving the out of pocket out of the equation.
There is an important, additional piece to coinsurance below.
3. My coinsurance is 100%, why am I still paying for services?
This can happen when you are using your out-of-network benefits. Your insurance company decides what the reimbursement rate is and says, “we believe this service costs x amount even though the provider charges y.” It’s like picking up your favorite soda at different convenience stores – you are annoyed that this new store charges $1 more than your usual place. Insurance companies say, “listen, I’ll give you the amount for what the soda costs at the local place.” The consumer is responsible to pay the difference.
There are a few options for reimbursement rates: Billed Charges, Medicare Allowed Rate, and the Usual, Customary, and Reasonable (UCR) Rate.
100% co-insurance for Billed Charges means that insurance will pay %100 of the cost that a provider bills for service x.
With Medicare Allowed Rate, your insurance will reimburse whatever Medicare would pay for the same service.
“Medicare reimbursement refers to the payments that hospitals and physicians receive in return for services rendered to Medicare beneficiaries. The reimbursement rates for these services are set by Medicare, and are typically less than the amount billed or the amount that a private insurance company would pay2”
The Usual, Customary, and Reasonable Rate refers to what your insurance company deems to be the “normal” across the board for the service in question.
“The amount paid for a medical service in a geographic area based on what providers in the area usually charge for the same or similar medical service. The UCR amount sometimes is used to determine the allowed amount.3”
Medicare Allowed Rate and UCR Rate are significantly more costly for you than Billed Charges.
When speaking with the service provider, insurance company, or both, make sure you are aware of the actual costs you will incur. There is an organization dedicated to bridging this gap: www.endtheinsurancegap.org.
Project Courage is an in-network provider of Anthem Blue Cross Blue Shield and Aetna. We are out-of-network with other private insurance companies. If you have any questions about Project Courage and our insurance information, you can visit our dedicated page, email us, or give us a call at 860.388.9656.
Lamontagne, C. (2014, August 12). Ask Christina: What is the difference between in-network and out-of-network?. Message posted to https://www.nerdwallet.com/blog/health/ask-christina-difference-in-network-out-of-network/
Norris, L. (2018, October 2015). How does a doctor’s participation in medicare affect reimbursement? Message posted to https://www.medicareresources.org/faqs/how-does-medicare-reimbursement-work/
U.S. Centers for Medicare & Medicaid Services. UCR (usual, customary, and reasonable). Retrieved March 1, 2020, from https://www.healthcare.gov/glossary/ucr-usual-customary-and-reasonable/
By: Tim Harmon