According to a survey this year by America’s Health Insurance Plans, 12% of all medical claims received by insurance carriers were out-of-network in 2011. That translates into huge out-of-pocket costs for American consumers, and sometimes uncapped costs. Out-of-network charges can be nearly 100 times (100 times!!) the rate that Medicare allows (typically you will be no more than 2 or 3 times the Medicare rate with insurance).
Don’t think any of that applies to you because you have good insurance? Think again.
Excessive out-of-network fees are typically not covered by your insurance carrier to the full extent, and are often not applied to your deductible. This means you could not only be on the hook for large fees for some services, but those amounts could be uncapped, the equivalent of being uninsured, even while having a very good insurance plan. New Obamacare plans don’t solve this, as they are not required to cap out-of-network charges. And almost all carriers are shrinking their networks further for new exchange plans. How did this slip through the Affordable Care Act?
Health insurance carriers negotiate rates with a number of physicians and hospitals to get lower rates with its plan holders. These providers and facilities form a health plan’s “network”. When patients go to providers “in-network”, the insurance carrier pays significantly less. It is reasonable then that a plan might want to discourage you from going with a provider not in that network. It is also reasonable for a carrier to remove all but the lowest-cost providers from its network over time. The ACA also wants to keep people away from the highest-priced providers, in an effort to reduce healthcare costs overall.
The trouble is, sometimes going out-of-network is the best or only way to ensure critical healthcare. Specialists and key facilities in various parts of the country may not have a relationship with your carrier. There are also many cases when you end up receiving services from an out-of-network provider because of the nature of integrated care by professionals from a number of different companies. For example, even though you know your physician and hospital are in-network, you may not think to ask if the anesthesiologist is.
The 12% figure will surely rise under the ACA. More individuals will find that their preferred doctor is no longer in their plan’s network. Employers are beginning to cut spouses and children from plans, which will add to the confusion about which doctor you should be going to for which family member.
Some of the largest carriers like UnitedHealthcare and Aetna will only cover out-of-network fees up to what they consider a “fair” amount, and then you have to pay the rest yourself, even if you’ve already met your deductible. Good luck finding out what the cost will be beforehand. Doctors and nurses don’t know, and many facilities are known to not provide that information even if you call their billing department.
Founder & CEO of Pricing Healthcare