Out of Network, Out of Line – What Happened Here?

Out of network, out of line – If you ever use out of network benefits on your medical plan, brace yourself for a huge shock when you get your bill.

One of the most significant coverage cutbacks that health insurers are making in 2011 is how they’ll treat medical expenses from out-of-network providers.  Insurers have now reinvented the term “usual, customary, & reasonable” or commonly known as “UCR” to be anything but that.  Historically, UCR levels were related to actual charges made by doctors in specified geographical areas.  Charges from all doctors, both those that participate with insurer networks and those that don’t, were put into a common data base that captured the full range of fees from the lowest charge to the highest and then insurers decided at what percentile cutoff to use as their maximum “UCR” level. For example, a 70th percentile would mean that charges from the top 30% pricier doctors would see some of their fees disallowed and a 90th percentile would mean that charges from the top 10% pricier doctors would see some of their fees disallowed.

Insurers have now quietly decided to instead use a percentage above Medicare fees – which have absolutely no relationship to what doctors really charge, as the basis of what is considered “usual, customary, & reasonable”.  Whether a company is using 110% of Medicare (Aetna) or 140% of Medicare (Oxford), the criteria is a downward moving target each year so the already large spread between what doctors really charge and the “UCR” levels will widen every year.

Why do you care?  The gap between what the doctor charges and what insurers now deem as acceptable charges (based on Medicare fee schedules) are 100% paid by the patient!  Especially on procedures, this gap can be thousands of dollars.  Ask your doctor what Medicare’s allowable charge for a particular procedure is and don’t be shocked to hear that it’s only about 20% of a typical 70th percentile fee. You’ll soon see that insurers will now blame their UCR cutbacks on Medicare. Out-of-network plan users who can’t use network providers will see their uncovered medical expenses soar and will need to find alternate ways to cover it.

In our next post, we’ll outline the various methods of dealing with this and other uncovered medical costs.

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