Claims

What is a Deductible?

If your health insurance plan’s benefits involve some type of deductible, this article will help you understand the general terminology involved in your claims, how your charges are generated, the life cycle of a claim, and what to expect with this type of insurance plan. I have to answer a few other questions to get a fully detailed answer to “What is a deductible?” so I hope you don’t mind learning a few other things, as well! There will be too many words below already, so let’s get started!

TERMINOLOGY

I won’t waste space on the literal terms here because our in-network insurers do a good enough job with their dictionary definitions, here:

These definitions don’t add much context to a real-life claims situation, so I’ve included a familiar scenarios to practically interpret or understand the terminology:

  • Your PREMIUM is a set payment every month to your health insurance company for the right to have health insurance benefits. This is a fixed monthly expense that you owe for at least an entire year, regardless of how often you use healthcare services.
  • Your COPAY is a static number that applies to certain types of consultations, usually PCP, Specialist, Urgent Cares, and sometimes also Emergency visits. Regardless of the length of visit or topics discussed, you always will owe this amount every time you have a visit.
  • Your DEDUCTIBLE is a variable number that sets an amount of medical expenses that the patient must pay for diagnostic services prior to the insurance company beginning to cover a portion of the same services. Most plans, even plans with Copays, have at least a small deductible for lab services and prescriptions, while others have deductibles that apply to all services.
  • Your COINSURANCE is a variable percentage that applies to services incurred after your deductible has been met. If you owe 100% of services before your deductible, your coinsurance percentage is the amount you’ll owe after your deductible has been met. You’ll owe this percentage until you meet your Out-of-Pocket Maximum.
  • Your OUT-OF-POCKET MAXIMUM is the total amount of expenses you can possibly incur for approved medical services over an entire benefit period. Unless you have charges that are non-covered, out-of-network, or otherwise excluded from your benefits (eg. employers not allowing employees coverage for weight loss products), this is the most you’ll pay.

Now that the terms I’ll use below are out of the way, let’s learn more interesting things!

HOW ARE CHARGES GENERATED

This is another topic that I spent ~5,000 words on already in this article, so I’d suggest clicking through to the original article if you would like more details.

Essentially, the total charge is comprised from 5 factors:

  1. Insurance Company and In-Network Status. Are you in-network or out-of-network? You’ll pay more for out-of-network.
  2. Benefits on Insurance Plan. Do you have a copay-based plan, deductible-based plan, or cost-sharing plan? That will matter.
  3. Length and Content of Visit. Was it a quick, easy visit, or a long, complicated surgery? Longer, more involved visits are generally more expensive.
  4. Preventive or Diagnostic Coding. Was the visit preventive, or diagnostic? Preventive visits are usually free, diagnostic visits are more expensive.
  5. Services Provided. Did you also have labs, procedures, vaccines, etc. with your visit? Those will add costs.

For a frame of reference, here is a listing of our uninsured prices for most services at Family Care. Each insurance has their own fee schedule and rate of reimbursement, but these are good ranges to expect for commercial insurances.

THE LIFE CYCLE OF A HEALTH INSURANCE CLAIM

It is important to understand the timing and steps involved in a health insurance claim process so you do not waste more time than necessary dealing with your insurer. It’s already terrible enough to call, knowing you’ll spend longer than necessary listening to the most annoying hold music science can create, and it’s even worse if you call for no reason. Basically, insurance claims require patience because they intentionally delay things on purpose to drive you crazy, so knowing where you are at in the timeline can save you a lot of stress!

These are the basic steps involved in a claim. A workflow diagram would probably be appropriate here, but this will have to do for now:

  1. The Visit (Day 0). This is the interaction where you received a billable medical service. This is thing you did that requires payment to a medical provider. You were probably sick that day, so I hope you’re feeling better now!
  2. The Claim (Day 7-10). Family Care waits 7-10 days to submit a claim to a health insurance, but this delay is not universal. The main reason that our office waits is to allow patients time to ask and address any follow up questions to their visit under a single billable encounter. This policy is designed to reduce overall patient expense and eliminates one of the barriers to positive outcomes by encouraging the patient to ask questions they forgot or notify our staff immediately if a treatment is not going well.
  3. The Patient Response (Day 24-40). This period is when you will first receive a statement from your insurer after having a medical visit at our office. An Explanation of Benefits (EOB) will have the first determination of coverage and explains how your benefits applied to the medical service you received. There will be a Remark Code that represents the coverage determination reasoning – if you owe any money for a medical service, this remark will explain why. It will probably be short and incomplete, which is designed to either make you misunderstand the reason or give your insurer a lot of wiggle room to explain how they applied their reasoning. If you disagree with any coverage determination, this is your head-start on fixing the issue before you receive an invoice.
  4. The Provider Response (Day 31-47). About a week after you receive your EOB from your insurance, your provider receives their own statement, called an Explanation of Payment (EOP). This is when our office would find out that you owe us money. This is essentially identical to your EOB statement, but with many other patients on the same file and fewer specific details on each patient’s individual benefits.
  5. The Invoice (Day 38-54). Within a week of our office receiving the EOP for your claim, you will receive an electronic invoice for any balances due. This will be sent to the email address we have on file for you. You will receive reminders every two weeks and start to incur late fees after 90 days, unless you are actively appealing a denial.
  6. The Appeal (Day 45-90). Insurers will consider coverage appeals within the first 90 days after processing a claim. If you disagree with the benefits applied to your claim, you will need to file a formal appeal. The appeal process is different for all insurers, but it should be detailed on your EOB from Step #3. If you appeal, please notify our office and we can help guide you to avoid wasting more time making unnecessary appeal attempts.

As a general rule, insurers take about 30 days for absolutely every decision. If you file an appeal, there is almost no point in following up within 30 days of the submission. You will likely just be told that it is in process and to call back again, so skip that step and just be patient!

WHAT WILL ACTUALLY HAPPEN WHEN I VISIT MY PROVIDER

Terms and theories are great, but knowing what will actually happen to you is better! These are basic examples of three common situations – you owe a deductible balance that you agree with, you owe a deductible balance that you disagree with, or your claim is denied completely.

In all of these scenarios, you would have already received some type of medical care and have an insurance plan that features a deductible-based benefits plan.

  • Deductible Owed (Correct).
    • If you receive your EOB and agree with the balance due, you just need to pay your bill! If you already paid at the time of service, you’re probably done with the transaction. If you have not yet paid, you should expect a bill in about a week. This should be what happens >95% of the time.
  • Deductible Owed (Incorrect). 
    • If you receive your EOB and disagree with the balance due, there are two probable reasons why you disagree:
      • The EOB says you owe less than you were billed, or less than you already paid. There are a lot of reasons this could have happened, but as long as everything that was denied was a “covered service” it likely means you’ll end up with a credit or refund back from your provider. In most cases, you likely met your deductible either before or during the claim in question, when it is generally impossible to tell which claims insurers will process first. You’ll end up owing the same deductible amount, but the provider that you have to pay that amount to might change based on the timing of the claims.
      • The EOB says you owe more than you were billed, or more than you expected to owe. Similarly, there are also plenty of reasons this could have happened. There will be a remark code underneath the claim table that explains why something was denied or not paid. Depending on this reasoning, you can either review your coverage with your insurer or review the claim’s coding with your provider.
  • Claim is Denied. 
    • This is a light grey area where the total you might owe the provider is the same, but you are not getting credit towards your deductible.
      • eg. A denied service costs $100. Your provider bills you $100. If it was covered, your $5,000 deductible would then go down to $4,900, saving you $100 by the end of the year. If it was denied, the charges don’t get applied to your deductible and you still owe $100, so it’s basically like having a $5,100 deductible at that point. Obviously, that is worse.
    • In general, you’ll want all charges to be “approved,” even if you end up having to pay for them. The denial remark codes will explain your next possible steps towards getting a denied service reversed and approved.

When in doubt, contact your provider. We usually receive our version of your claim statements about a week after you do, so don’t freak out immediately when receiving a scary EOB. We can definitely get started on fixing issues before we receive our own statements, but just remember that we might not yet be aware something went wrong with your claim and will need a bit of time to help identify the issue. There is a general strategy to fixing every type of problem, but understanding what those problems look like and identifying how they happen should hopefully provide the tools necessary to defeat your insurance denial and receive the most from your insurance benefits.

Determining Plan Details

Determining Plan Details

One of the most common problems that people experience with their health insurance is the frustration of having to pay out-of-pocket for a service or prescription that they thought would be covered by their insurance plan. “I thought that was covered” is a common phrase with patients and most of the negative perceptions of health insurers stem from the general distrust that this reaction causes. People are skeptical about insurers covering certain things because they have been burned in the past and see insurers as being greedy whenever they end up owing more than just their premiums for their healthcare expenses. While insurers do sometimes make mistakes and deny things that should be rightly covered (which you have the right to appeal), your insurance is usually processing your plan’s benefits exactly how they said they would when you signed up for the plan. They probably even have your signature on a sheet of paper saying you agreed to their terms. Sneaky, I know.

The problem usually begins because patients misunderstand their coverage and get surprised when they see the differences in benefits from what they thought they would have to what they actually have. The new Farmers Insurance commercials are really a perfect example. Knowing your coverage could influence your decision on where and when to get treatment and help you reduce your overall out-of-pocket expenses. It will also keep you from being surprised with unexpected bills or regretting services that you wouldn’t have done if you knew the cost. You may even change plans entirely because you realize your coverage is terrible, or if you are paying too much to have coverage for services you don’t need.

Because all plans are unique, it is impossible to make a single guide that covers everyone to determining your coverage. This post is designed to help you understand the thought processes and terminology behind determining your plan’s details so you can navigate through your own insurer’s information with a good idea of what you should be looking for.

Which health insurance plan do you have?

This is probably one of the first questions you’ll have to answer and is the starting point for all other questions you’ll be asked in every possible healthcare situation. When someone asks you what health insurance you have, what do you say?

bcbs_insurancecard
Example Insurance Card

There are two things your healthcare provider or pharmacist is always looking for when they ask this question.

  1. The name of your insurance provider. This is the most basic starting point and 100% necessary for your provider to determine your plan details. Examples include Blue Cross Blue Shield (BCBS), CIGNA, Aetna, United Healthcare, etc.
  2. The plan type and/or name of plan. This is the first subsection of the insurance provider and describes the plan option you chose when signing up with your insurer. Sometimes the plan has an actual name. Examples of BCBS plans include Blue Advantage, Blue Value, Blue Options, Blue Saver, State Employees Health Plan, etc. The plan could also only be described by letters, like PPO, HMO, POS, EPO, etc.

Depending on the situation, your provider might also need some additional information. Typically, you will be asked for the rest of this information if you are going to be receiving medical services or prescriptions, if you need a prior authorization for anything, or if you are being referred to another doctor.

  1. Your Subscriber Number. This is the first basic identifier on your insurance card. It may also be called your Member Number, Identification Number, or something else similar. This is the biggest and most important number on your card, so it is probably highlighted in some way. If you have dependents on your plan, the Subscriber Number includes the two digit suffixes assigned to each dependent. For example, Dad could be ABCD0000-01, Mom could be ABCD0000-02, and Daughter could be ABCD0000-03.
  2. Your Group Number. This is usually the second most featured number on your insurance card and allows your provider to see which pool of subscribers has a similar plan. This is usually unnecessary for most purposes, but is generally required if you need a prior authorization so it is good to have on file. The group number also helps providers figure out your plan details when you have private employer-based plans or some of the more obscure plans available that they might not see that often.
  3. The Payer ID # or the Billing Address. This is necessary for billing your insurance, but most providers already know the proper way to bill your insurance provider and don’t necessarily need it if you have a popular insurance plan. If your plan is based out-of-state or if you have a smaller, more obscure plan, you will probably be asked for this information. The Payer ID # is a 5 digit number on the back of your card and should be somewhere near the Billing Address.

That information will help your provider process your claims, send referrals, and obtain necessary prior authorizations. It will not allow your provider to tell you how much you will owe for a service or what types of benefits you have on your plan. Knowing your basic plan details only guides your provider so they can use the proper channels to correctly process your insurance benefits – it will not help them predict what those benefits will be, or even if there are benefits allowed for a service, at all.

Because plan details can vary on an individual basis, it is impossible for your provider to predict your benefits with complete certainty. We process the claims at the time of service with every piece of verifiable information we have available, but there are always surprises.

For example, you may pay a $20 copay for your visit. Then, after your plan processes the claim and says you are not covered for that service, you find out that you are required to pay 100%, instead. This is why it is important for you to know your own coverage – you are the person that is impacted by how your claims are processed and are ultimately responsible for any surprises that happen with your plan, so it is best to avoid them!

What are my benefits for this service?

The primary thing everyone wants to know – how much do I have to pay for this? There are several methods you can use to figure out your plan’s details for a particular service and the types of benefits you can expect to receive.

  1. Look at your insurance card. This is a “snapshot” of your coverage and usually shows the most pertinent details of your plan. The problem with relying on this is the lack of detail and explanation for your coverage for specific services, or the types of exclusions or exceptions that may be active on the plan. With most plans, this shows what you’ll need for the majority of the services you’ll receive.
  2. Reference your enrollment paperwork and benefits package. Whenever you sign up for a new insurance plan, your insurance provider is obligated to send you a detailed package that includes your plan’s coverage benefits. This is usually sent within a couple weeks of your enrollment and may be updated each year with a new packet of information. Usually, there is a table of information included with three columns – the service type, the plan’s in-network benefits for that service, and the plan’s out-of-network benefits for that service. Whenever you visit a provider or facility, reference their section on this table to help predict what your benefits will be for that visit.
  3. Contact your insurance provider. On the back of your insurance card, there should be a customer service number that you can use to ask any questions you may have about your plan. They will always give you a standard “this call does not guarantee payment of services and benefits will be subject to the plan’s details at the time of service” spiel to make sure they aren’t promising coverage they can’t provide, but they should be able to tell you what your copayments or deductibles are and how they apply to certain types of providers and services. Most plans have online portals with customer service emails or live chats, as well, but the process is the same. You’ll want to contact your provider for the CPT Code they will use for the service and ask your provider specifically about your benefits for that code.
  4. Look at how previous visits processed under the same plan. Past coverage is a good predictor of future coverage, but only if the plan’s details have not been changed. If you had a $25 copayment for a sinus infection six months ago, and your plan has not changed since then, you will probably owe a $25 copayment for a sinus infection today. This could be a little problematic because it refers to your benefits at a previous date, rather than your benefits today, so make sure your plan details have not been modified since the service you are using as a reference.
  5. Just hope something is covered and deal with it later. This is probably the worst option, but it is usually the one most people end up choosing because they are either intimidated or frustrated or confused with the process for actually understanding their benefits. Because this experience just ends up perpetuating the “patient-versus-insurance” mindset, when the two should be working together towards the mutually beneficial goal of reducing the cost of healthcare, I hope this post helps people avoid this option!

This was a basic summary of ways you can determine the details on your insurance plan.  This is the fourth post in a series on understanding the insurance claim process. In the rest of the blog posts in this series, I will explain the specifics involved in your EOB, including detailed information on the following topics:

  1. What is an Explanation of Benefits Letter?
  2. Basic EOB Terminology
  3. Determining Patient Responsibility
  4. Determining Plan Details
  5. Accessing Online EOBs
  6. Understanding Denials and Denial Codes
  7. How To File an Appeal

If you have any specific questions or topics you would like us to discuss, please mention them in the comments below and we will address them in future posts. If you are a patient at Family Care and have any questions about EOBs you received for claims from our office, please let us know by filling out our contact form. Thank you!

Determining Patient Responsibility

This is the third in a series of posts about the insurance claim filing process. The process can be daunting and seem confusing, but the basic components are fairly easy to understand if you break them down individually. The goal is to help our patients, and everyone else, understand what is actually happening “behind the scenes” when you use your health insurance. You can read the rest of the series by clicking on the link headers at the bottom of the post.

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What is an Explanation of Benefits letter?

This is the first article in a series about the Explanation of Benefits summaries that the patient receives after their provider files a medical claim. To read the rest of the series, please check out the links below.

What is an Explanation of Benefits letter?

Whenever you receive medical services and your provider files a claim with your health insurance, you will receive an Explanation of Benefits (EOB) letter in the mail from your insurer a few weeks after your appointment. If you are enrolled in an online membership account with your insurer, you may receive your EOBs electronically, instead. The EOB is an itemized statement of the claim filed on your behalf by your provider and gives a detailed summary of the amounts that are required to be paid by the patient. This summary includes all negotiated discounts and reflects the amount still outstanding after the insurer has processed the claim and assigned whatever insurance policy benefits the patient has through their insurance plan. This letter is meant to make sure that the patient is aware of the charges that have been filed on their behalf, thereby decreasing medical fraud and making patients aware of the true costs of their medical care.

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