Understanding the American Health Care System
Posted on April 10, 2008
The health care system in the United States can be complex and confusing. A myriad of factors both obvious and subtle contribute to health care products and services that vary in quality, service, and cost from person to person and among geographic areas. By understanding some of the factors that affect the care you receive and knowing how to navigate the increasingly complex health care system, you can make better
decisions and ultimately receive better care.
Usual and Customary Fees
A usual and customary fee is defined as the charge for a medical service or procedure that is in line with the average rate or charge for identical or similar services or procedures in a specific geographical area. Health plans often analyze national fee statistics to determine a usual and customary fee that they will reimburse a provider for a specific medical service. When you submit a claim for a specific treatment or service, the
insurer will pay all or part of the claim, depending on whether the amount of the claim is within the usual and customary range. Health plans are aware that fees charged by providers can vary depending on medical complications and underlying medical factors that may not be apparent by looking at a claim. To appeal a usual and customary
determination, you should ask your provider to provide all pertinent medical records to your health plan along with a letter explaining the circumstances that support their fee. Often health plans will adjust their payment determinations in your favor after they receive additional supporting information.
Understanding Your Explanation of Benefits
An explanation of benefits (EOB) is a form that insurance companies send to their members to explain what part of a claim was paid by insurance, what part was not paid, and why. Many find EOBs difficult to understand because they differ from one insurance company to another. Some insurance companies combine several dates of service or several providers on a single EOB form. Others prepare separate forms for each date of service and provider you see.
Use the EOB to Help You Manage Your Benefits
The main purpose of your EOB is to help you determine if your claim has been paid, how much has been paid by your insurance company, and how much is your responsibility. Then, you will know which invoices to pay and how much. To figure out who has been paid, match the treatment dates and providers from the invoices to the dates of service and providers listed on your EOB. Make sure your provider gives you an itemized invoice so you can effectively match your EOB to your invoices.
Keep in mind that insurance companies rarely pay one hundred percent of a claim. You need to pay your part in applicable deductibles, coinsurance, and copayments.
Below are some common reasons for partial payment of a claim by your insurance company.
• Part or all of the claim was charged to you to satisfy your deductible.
• Part of the claim was charged to you in the form of a copayment.
• Part or all of the claim was charged to you to satisfy your coinsurance requirement.
• The charges for the services exceeded the maximum benefit available for the service.
• Your insurance policy was not in force on the date of service.
• The claim was a duplicate and had been previously paid.
• The charges exceed the insurance company’s reasonable and customary limitation (this happens more frequently when you use out-of-network providers).
• The charges are for a non-covered service (e.g. cosmetic surgery).
• The charge was for a pre-existing medical condition that is excluded from coverage
If you receive an EOB showing that your insurance company did not pay for your entire
claim, first determine the reason why, and then determine if the reason is valid. If you believe there has been an error, contact your health plan’s member services department to ask them to review the claim.
Disputing a Claim
Chances are at some time you will have to dispute a claim that has been denied by your health insurance company. Some issues will be minor and easily resolved simply by calling the health plan’s member services department. Some issues may not be as simple to resolve. In these cases, first talk to your human resources department if you have insurance through your employer, or seek help from your state insurance department, attorney general’s office, or consumer affairs department. You have a right to appeal the way a health insurance claim was paid or a claim denial. Most states have laws that require appeals to be processed within a certain time. Your state’s appeal policy should be clearly written in your benefit summary. Once you have filed an appeal, your insurance company is required to respond within a specified period. Below are some tips for handling more complex claims disputes.
• Any dispute of a claim or benefit denial should clearly indicate that service is a benefit under your medical plan, and that it was medically necessary. Provide any supporting documentation, including copies of your benefit summary or a letter from your provider indicating that it was a medically necessary service.
• If you have been denied service due to medical necessity, you must supply proof that the procedure was medically necessary in order to have a denial overturned. You will need to provide information about your condition, symptoms, previous treatments, and your provider’s recommendation for the treatment in dispute.
• Clearly state the reason for your appeal. Remember that another person is going to read your appeal. Evaluate your written argument and supporting information. Ask yourself if your evidence supports reversing the denial. A well-written appeal with definitive supporting evidence will increase your chances for a reversal.
For more information about disputing a claim decision, visit www.iatrogenic.org/complaint.html.