Health insurance is complicated and healthcare costs a lot. If you’re not up for a complicated read, here’s the short version: Don’t use out of network providers if you can avoid it. If you think healthcare is expensive, out of network healthcare is very expensive! But if you want to dig a bit deeper, read on.
Maybe your doctor has recommended you see a certain specialist who’s not in your insurance network. Maybe you’re in an accident and the closest hospital isn’t in your insurance network. What then?
Here’s a story about how out of network care impacted one client.
Following a diagnosis of an uncommon cancer, Doug’s* (name and certain details have been changed to ensure privacy) oncologist suggested that he may want to consider a second opinion with a specialist at the Mayo Clinic with significant experience with his type of cancer. Doug knew that the Mayo Clinic was out of his insurance network. He knew that out of network providers would cost him more, but he trusted his doctor’s recommendation.
After checking his benefits, he saw his out of network, out of pocket maximum was $14,000. That’s a lot of money, but he and his wife had savings, and if they had to spend that much, they felt it was worth it.
When a provider doesn’t have a contract with your insurer for your plan, this means is there is no wholesale/contracted price your insurer can adjust the bill to. So the insurance company averages what they pay, including to lower cost payers like Medicare and Medicaid in the area for the services you had, and that is what they pay the provider. That sounds reasonable, right?
Issue Number 1. Doug assumed that his out of network deductible was accruing based on the billed charges. He was wrong. Out of network charges accrue to your deductible based on what is paid by your insurer, not on what was charged.
Issue Number 2. The insurance company paid Mayo that blended amount, which was a lot lower than what Mayo had billed. Because Mayo was out of network, they were allowed to bill Doug the difference. This is called “balance billing.” So while there was some payment from the insurance company toward the bill, the patient is still responsible for the entire billed amount.
Doug’s anticipated $14,000 bloomed to over $30,000!
Here’s another way to look at it:
In Network providers
$14,000 charge ⇒ Insurance contract allows $6000 ⇒ Provider is paid $6000 (patient and the insurer)
Done, patient is off the hook.
In Network out of pocket maximum accrual: $6000
Here’s how it looks different when you use an out of network provider:
Out of network providers
$14,000 charge ⇒ Insurance contract allows $3500 ⇒ Provider is paid $14,000
($3500 from insurance and the remaining $11,500 from you). Yikes.
Out of network out of pocket maximum accrual: $3500 (not $14,000 as many of us think).
Providers love to see patients that are out of network. It’s one of two times (the other is when a patient has no insurance at all) that they have the right to collect the entire amount they bill.
What about that other scenario, where there’s an accident and you’re taken to an out of network hospital? Or, as Haley Edwards wrote about this year in “You Only Think You’re Covered”, your in-network doctor or hospital uses an out of network lab or specialist?
This happens more than you might think. So much more that several states have enacted legislation to protect consumers from these “surprise medical bills” by requiring that insurance networks are large enough to provide coverage, and to hold providers and insurers responsible for settling out of network charges related to emergencies, not patients. Georgia Watch has been instrumental in pushing for these kinds of protections in Georgia.
What can you do to protect yourself?
- Call the provider and ask if they participate with your insurance. Share the full plan name “Blue Cross Blue Shield Open Access POS.” Providers don’t necessarily participate with all the plans an insurer offers.
- Insurance network directories are notoriously not up to date. Check your insurer’s website for the provider or hospital’s network status. Even if you find the provider in the online directory, if you’re really worried, considering calling the insurance company customer service department and confirm that the provider is still contracted.
- If a provider is out of network and if your referring doctor feels seeing that provider is medically necessary, ask if they would be willing to contact your insurance company and request that the out of network doctor be considered as in-network for you.
- Ask hospitals to verify coverage of other specialists or services that will be involved in your care (or identify the other entities that may be billing you so you can check your directory, especially anesthesia).
- If you’re choosing to see an out of network provider, call in advance and ask for an estimate of charges, as well as payment policies. Contact your insurance company and have a benefits specialist review what your out of network benefits cover and how payments will be calculated.
In an emergency:
- Call and notify your primary care doctor of the situation as soon as possible.
- Call and notify your insurance company’s customer service of the situation as soon as possible. If a facility is out of network, request all records from the hospital on discharge, and appeal any insurance decisions for out of network coverage based on medical necessity.
And if you still find your self with a surprise medical bill that doesn’t add up, a private patient advocate can help with resolution.