By ANNA WILDE MATHEWS
Wall Street Journal
Patients beware: Your out-of-pocket expense for healthcare may increase. Learn about what many large insurers are doing when it comes to paying for doctors and hospitals that are not in a plans network. It could prove to be very costly to the average consumer. All the more need to obtain and advocate who can help negotiate your medical bills
Consumers know they will have to pay out of their pockets if they use medical providers outside their insurers’ networks. But because of a little-noticed change, they may find themselves with even bigger bills than they expect.
Several major insurers are now using rates based on Medicare fees to calculate payments for out-of-network providers. Those amounts are often a lot lower than what doctors and hospitals actually charge.
The upshot: Providers may bill patients for the difference. What’s more, that bill comes on top of whatever patients owe in deductibles or co-payments.
New York entertainment attorney Mark D. Sendroff says he knew he’d get a bill when he went to an out-of-network surgeon for a shoulder operation last summer. But he was shocked when his AetnaHealthinsurance plan paid only around $1,000 of the surgeon’s approximately $30,000 charge — and part of the payment was his deductible. “It was absolutely crazy,” he says.
Mr. Sendroff thought the plan was going to pay his doctor based on a “usual and customary” rate that’s supposed to represent a typical charge for his area. Instead, the insurer pegged the doctor’s reimbursement to 110% of the fee paid by Medicare. Mr. Sendroff appealed the decision, and after he contacted the New York attorney general’s office, Aetna agreed to pay more, he says.
Aetna says some of its plans began basing out-of-network payments on Medicare rates in late 2009, and typically they pay a percentage above the government program’s fees. In New York, the company says it warned insurance brokers the new system might generate bigger out-of-pockets, and mentioned the issue in a summary for potential customers. Aetna declined to comment on Mr. Sendroff’s case, citing privacy rules, but said $30,000 was “well above the average charge” for such surgeries.
Health Care Service, the nonprofit parent of Blue Cross and Blue Shield plans in Illinois and Texas among other states, began phasing in Medicare-based fees last year. Cigna says employers are increasingly opting for plans that pay a set percentage above Medicare.
Insurers say Medicare is a reasonable basis for reimbursement. An Aetna spokeswoman says the Medicare based payments are a “more consistent way of paying and keeping the premium down.” Health Care Service says the Medicare method helps “increase transparency for providers and members.”
For patients, the safest financial path is to use insurers’ networks. When this isn’t possible, they need to do their homework before getting treatment by talking to their providers and insurers. It’s best to get billing codes for each service and run them past the health plan, says Ida Schnipper of Health Champion, a patient-advocacy firm.
Patients also should watch for unexpected out-of-network providers. For instance, an in-network hospital might have out-of-network anesthesiologists. If they do get stuck with a charge they didn’t see coming, they can appeal to the insurer and also try turning to a state regulator for help. Providers also sometimes negotiate discounts with patients.
Starting in August, consumers can turn to a new usual-and-customary medical charge database operated by Fair Health, which will be available at fairhealthconsumer.org. Currently, the site only has dental fees. The nonprofit says it expects a growing number of insurers to use its data.