Tuesday, March 28, 2006

Healthcare Billing Part I

I have been mulling over posting this kind of article for a little while now. Now that I have a more complete draft, to heck with it, part I. In this we will go over some basic definitions and give an overview on the things you can do when you receive a bill. We'll also cover some example scenarios, and if this really helps someone out then all the better. You are getting this information from an insider in the business, who has been doing healthcare billing for a few years now.

With that out of the way, a brief disclaimer.

This information is not to be considered legal advice. My best advice to you, is to find what I present and ratify it with another source so that you have two sources saying the same thing. Your situation is VERY unique to YOU. You may have extenuating circumstances with a hospital or doctor that can change your path to resolution drastically.

Basic principles.

Insurance companies over the years follow certain standards. Right now we are seeing the path of HMO’s running their course and they either go away or become PPO’s. The HMO standard was called “managed care” and that was the type of insurance where you had to get a referral from your primary doctor if you needed something special done.
However, insurances still adhere to a few basic methodologies. You have your deductibles, out of pocket max, copays, coinsurance, and potentially in network and out of network benefits. Let’s go over a few of these. Some of you may well know all of these terms because you’ve been screwed by insurance companies already and had to learn the hard way. Some of you, however, may not know this. Believe it or not, I regularly get asked what some of this stuff is. Without further adieu.

  • Deductible - The easiest way to explain a “deductible” is to simply say, that the deductible is the amount of expenses you have to rack up with a doctor or hospital (industry lingo calls a healthcare providing entity a “provider, be it a doctor, hospital, dentist, whatever) before your “benefit” kicks in. This means if you have an insurance that covers %80 that you have to get charged so many dollars before the insurance starts to pay at that %80. No, insurance companies do not pay anything on the deductible expenses, they pay AFTER the deductible.
  • Copay - A copay is a lot simpler than a deductible. If you have a “copay” based health plan, or your benefit covers a certain type of service based on a “copay” then you just pay the copay and don’t worry about it. For example, to go to the doctor because you are sick if your copay is $25 then all you pay at the doctor’s office is $25. The insurance will (hopefully) resolve the rest of the balance. This is what everyone wants for an insurance. Unfortunately these are expensive and hard to get at a reasonable price.
  • Coinsurance - This coincides with the deductible. The coinsurance is literally the remaining balance after the benefit kicks in. If you get charged $100.00 and you have already met your deductible, using the aforementioned benefit of %80 then your insurance will pay %80. Coinsurance is the remaining %20 that you have to pay. It’s not too complicated, but obviously we’d rather have copays in most cases.
  • Out of pocket max - These can be very nice. If your insurance has an out of pocket max, and quite a few do, then this means the amount of money you pay before your insurance kicks in and just pays EVERYTHING. If your out of pocket max is $5000 then once you have paid $5000 for that year, everything after that point is covered. The flip side to this, however, is that if you’ve got enough stuff going on to meet your out of pocket max you are usually not in good enough shape to really enjoy the financial reward of not having to fork out more.

With that out of the way, let’s go a bit deeper into this shall we? What I mentioned earlier about in-network benefits and out-of-network benefits complicates things. You need to pay attention to your in network versus out of network benefits if you have this type of insurance. This mostly pertains to doctors and counsellors. Let’s say you have an in-network benefit of %80 with a $1000 deductible and then an out-of-network benefit of %50 with a deductible of $2000 you can really get screwed. Hospitals seldom have this problem as if you see an in-network doctor he will very commonly do a surgery on you at an in-network hospital as well, but it does occasionally happen if your doctor is a moron that even though HE is in-network he’ll have you go to an out of network hospital.

What this literally means, is that depending on who you go to if they are not in your insurance company’s “list” then you can end up paying a lot more. Your out-of-network benefit will get applied and there would be nothing you could do about it. Before visiting a doctor you haven’t seen with your insurance, make SURE that he/she is in-network. Call your insurance, and ask them if the doctor you want to see is in-network, and if that doctor isn’t ask who is. It boils down to, if you are dead set on seeing one particular doctor, be prepared to pay for it.

This is a real scenario I ran into once, and you'd be surprised how often this sort of thing comes up. In the interest of protecting privacy, I will call this person “Jean”. I am trucking along at work, and Jean calls me up. She has a question about her bill, and she asks why her out of network benefit was applied. She asked me “Isn’t your facility in-network with my insurance?”. I looked at her account and responded “Why yes, we process lots of claims with them and they all process as in-network. Are they reducing your benefit because they say we’re out of network?”. “YES” she kurtly responded. Checking over her account, it’s a type of insurance we frequently bill, and we get paid on these claims often. What had happened was that we billed the claim, and the insurance didn’t hardly pay anything. The insurance stated it was a reduced benefit on the paperwork they sent her and the insurance instructed us to make the balance her responsibility. Knowing something was amiss, I promised Jean I would investigate this further. Upon calling the insurance company to find out WHY they would think we are out of network, and I pointed out that we have a contract with them, it turned out to be a mere system glitch in processing the claim. They required some paperwork I was able to easily produce so they could figure out how to pay the charges correctly and the situation was promptly resolved. The bottom line is that if Jean had just paid the balance, she would have ended up paying $1,500.00 that she didn’t have to.

I bring up that scenario, because that is another possibility that can happen. You have to pay attention to in-network and out-of-network. It gets so many people into further debt than they need to, and paying attention to this will save everyone involved a lot of trouble and headaches. Especially you if you don’t have to pay as much.
I’ll continue in this set of articles, next topic is another couple of scenarios that can happen (and do at most hospitals). Charges and your rights to dispute them. I’ll also tell you how.
It wasn’t my intention to turn this into a medical blog, but I get asked about this often enough. That, and those idiots at 60 minutes ran a show that was very ill informed and ambiguous about hospital billing. Yes, there are bad apples out there. However, most places have people just trying to work. Most executives don’t get “big bonuses” based on revenues, most just draw a salary and do their jobs. Yes they get paid more because they shoulder a lot of responsibility. They also shoulder compliance responsibility, and they get to wear the orange suits for someone else’s fraud if it occurs.
Anyhow, enough of that rant. I hope this helps someone out.

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