Many health insurance plans sold through the Obamacare exchanges or offered as a benefit through your employer come with provider restrictions that significantly impacts how much money you pay out-of-pocket each year.
The most important thing to keep in mind about your health insurance plan is how the provider network is structured. It used to be that your doctor was either in-network or out-of-network. However, like everything involving healthcare, it’s gotten much more complicated. Be aware of which hospitals and doctors are part of your preferred in-network… it is just as important as knowing who is out-of-network!
Why do networks exist in the first place?
Provider networks were created because of the way healthcare prices are determined in our country. The price that a doctor or hospital charges you for a service is extremely subjective and highly variable. How much you ultimately pay for that office visit or surgery or hospital visit boils down to a complicated process of contracts, negotiations and complex formulas.
Given this variation and complexity, health insurance companies set up provider networks as a way to reduce costs for their members. You will benefit from a lower monthly premium by visiting a narrowly defined list of providers who are part of a network made up of the most cost effective providers.
If you want to go to the hospital that falls outside of that network, then be prepared to pay more out-of-pocket or to pay more each month in the form of a higher premium.
Why are hospitals and doctors put in different networks?
It boils down to how much money the hospital and doctors expect to collect for the services delivered. If those prices vary substantially from others in the area, then insurance companies will create tiers ranging from the most expensive providers down to the most effective.
Why don’t hospitals and doctors change their prices to be in the preferred network?
Some hospitals and doctors may decide to lower their prices or to enter into a new contract with your insurance company, especially if they think it will help them attract more patients. But if they don’t think that bet will pay off, then the hospital may decide not to be a part of the network. Some hospitals believe they can ultimately make more money if they can charge the higher price, even if it means potentially fewer patients. Or even if it means alienating their patients by sending them large bills when their insurance benefits don’t pay as much.
What does this mean for me?
Let’s pretend that you bought a plan from your local BCBS insurance company.
Hospital #1 may charge $5,000 for a CT scan. The hospital may strike a deal with BCBS to deliver that imaging study to its members for $4,000.
Hospital #2 may charge $10,000 for the very same CT scan. For various reasons, the hospital decides not to sign a contract with your BCBS plan and instead charges you the full list price.
To further complicate matters, a freestanding imaging center just a few miles away from both hospitals may only charge $1,000 for the use of that same CT scanner. Perhaps they decide that all patients with commercial health insurance can access the services for $500.
In order to keep costs under control, and to be able to offer you a lower monthly premium, BCBS may design a health plan with different tiered provider networks. In our example, the freestanding imaging center would be the preferred provider of high tech imaging scans given how much lower their prices are. You could still go to the first hospital since they are in network but you will likely pay much higher copays, deductibles or coinsurance for that flexibility. Watch out if you wind up at the second hospital – as the out-of-network provider, you could be billed $10,000 for that imaging study!
What can you do to manage unexpected costs due to out-of-network providers?
Before you need services, there are 5 steps you can take to be more prepared:
Call your insurance company
Ask which hospitals and providers are most cost-effective, given your particular health plan. Sometimes you can find similar information if you visit your health plan website. Many have find-a-doctor tools to help you find the most cost-effective providers and estimate costs for certain procedures ahead of time.
Know your preferred hospital
If you care about your out-of-pocket expenses, you MUST be aware of which hospital is your preferred facility. When it comes to managing expenses, it’s much easier to deal with out-of-network doctors after the fact than it is to deal with out-of-network or “less” preferred hospitals.
Verify with the billing office
Ask them to verify your eligibility and benefits before your appointment to make sure they still accept your insurance and ensure that they are part of your preferred network. Ask for a cost estimate in writing. If they won’t provide that information or if you find out later they weren’t able to provide accurate information, then consider finding a different medical practice to avoid unexpectedly high bills.
If a healthcare event leads to a surprise medical bill due to provider network issues…
File an appeal with insurance
If you visited your preferred hospital and got surprise bills from the doctors, your insurance company may reconsider how the network benefits are applied and help cover more of your costs.
If your attempts to appeal with insurance fail, then consider hiring a professional. A patient advocate knows what information to gather and how to effectively create a bulletproof appeal. An medical billing expert knows to make sure you don’t have to pay more than a fair and reasonable price for your healthcare!
By Rebecca Palm, CoPatient