Price is generally the driving factor for the customer when buying a group health insurance plan. Companies are trying to buy the most comprehensive coverage for the price they can afford. So you recommend what looks like the best plan for your client, and all is right with the world. Once your client’s employees actually start using it, however, the problems begin. One of their employees finds out that his new wife isn’t eligible for benefits. Another finds out that she owes more than the $20 copayment when she goes to a network provider for a colonoscopy. Another gets a bill in the mail for $4,350 for knee surgery performed by an out-of-network surgeon who billed a total of $7,500.
Your client, let’s call her Mary, calls you, and the resulting conversation is not very pleasant. Does any of this sound familiar? Or has the fear of these things happening prevented you from sticking your toe into the health insurance pond?
The following are important items you should know about group health insurance plans. Knowing these would have enabled you to help Mary and her employees understand what to expect from their plan, in addition to other issues that have yet to arise but could.
This is not normally a problem, but adding and terminating employees during the policy year can create issues if not done timely. Typically, enrolling a new dependent must be done within 31 days after they are acquired. Most insurance companies follow these rules to the letter, so it is very important to know these rules and educate your client.
While it is generally true that if you go to a network provider, you are eligible for network benefits, in most point-of-service plans, visits to a specialist such as a surgeon must be recommended by a network provider for the visit to be considered in-network. This is true for hospital visits, as well. In most point-of-service plans, you need to be admitted by a network provider before the hospitalization can be considered in-network. If a non-network provider admits you, then the entire claim, including the hospitalization, may be considered out-of-network.
Usual, customary, and reasonable (UCR)
Out-of-network services are generally subject to UCR fees. In general, these are the fees most often charged by practitioners of a particular specialty in a geographic area. UCR fees are expressed in percentile ranges. For example, in the not-too-distant past, most carriers paid at the 90th percentile. This means that a carrier would allow a fee that exceeded the fees charged by 90 percent of the practitioners in the geographic area. Today, many carriers offer different levels of UCR for different premium increments. You may be able to purchase out-of-network benefits at the 70th, 80th, or 90th percentiles. As in the above description, if your plan is at the 70th percentile, the carrier would allow a fee that exceeded the fees charged by 70 percent of the providers in a geographic area.
The practical application of UCR is that not only will the out-of-network benefit be paid at, for example, 70 percent, but the fee the percentage is based upon may very well be less than what the doctor charged. In the scenario described above, because UCR is at the 70th percentile, the carrier only allowed $5,500. This means that the claim is calculated using the $5,500 fee. If the deductible is $1,000 and the out-of-network benefit is 70 percent, the claim would be paid using the following formula: $5,500 – $1,000 = 4,500 x 70 percent = $3,150. Mary’s employee was responsible for the difference.
Most employees are accustomed to pre-certification of hospital stays. However, many non-hospital procedures may also require pre-certification. These are usually expensive procedures such as MRIs or expensive drug regimens. It is important to know these.