Your Non-Network Out of Pocket Maximum Does not Mean Much and what YOU can do about it

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Everyone knows that there is In-Network coverage, and Non-Network coverage.  In most cases, people choose to stay In-Network for their medical visits and surgeries.  Most consumers choose to stay In-Network since deductibles, coinsurance, and Out-of-Pocket (OOP) Maximums are much lower.

Non-Network coverage is provided for within most PPO contracts and HSAs.  This is generally at a much higher Deductible, Coinsurance Amount, and OOP Max.   It is common for group medical contracts to have Non-Network OOP Maxs of $8,000 – $10,000 per member per year.   Individual and ACA Plans can have Non-Network OOP Max as high as $100,000 or even unlimited.  See my recent post on this here:   https://davepetno.com/2015/04/10/out-net-out-of-pocket-max-jump-under-the-aca/

However, no matter what the listed Non-Network OOP Max is, the liability to the consumer can be virtually limitless.

Here is why.

When a consumer goes to an Non-Network Provider, they are not protected by a contractual relationship between the provider and an insurance company that prohibits the provider from balance billing the consumer.  That means that the provider can bill the consumer any amount above and beyond the amount that is collected from an insurance company, that is consistent with the provider’s charge-master.

As a result, the consumer could become saddled with hundreds of thousands of dollars of balance bills.

Here is a real life example (procedure changed for illustration).

A client of mine chose to have rare eye surgery from a Non-Network hospital and doctor.  His Non-Network Coinsurance amount was 40%, his deductible was 5,000 and OOP Max was $10,000. The charges for the treatment totaled $300,000. The insurance company deemed only $200,000 of the charges as within Usual, Customary, and Reasonable charges (UCR).  The remaining $100,000 was denied as above UCR.

Immediately, the client became subject to the $5000 deductible.  Next, the $10,000 OOP Max protected against the 40% Coinsurnace amount which would have been $80,000 (40% of the $200,000.)   At this point, the client was liable for $10,000 while the insurance company paid $190,000.    In total, the provider and hospital would receive $200,000 in payments from the insurance company and the client.

You would think they would call $200k “good enough” right?   Wrong!

The provider group balance-billed the client the additional $100,000 in order to recover their entire $300,000 charge.  What makes this worse, is that the provider have every right to do so. As long as they are charging their normal charges, they have a right to bill patients for their services.

This is when we, as Brokers, were called in to see if we could remedy the situation for our client.   And after countless phone calls, emails, and begging and pleading, we were finally able to eliminate the additional charges for our client.  It was not a pretty process, but we got the job done.

Moral of the story.  Stay In-Network if humanly possible.

However, if you must go Non-Network, here are some tips. 

Tips if you have to go to a Non-Network Provider?

First, make sure you have evaluated all In-Network options.  Ask yourself, are you sure you really need to go Non-Network?

If you still believe that Non-Network is required, follow the following steps.  

  • Identify the procedure codes and ask the Non-Network providers to give a detailed list of what will be billed and the expected costs.
  • Call the 800# on your insurance card and ask for a customer service specialist, who can tell you what will be allowable under UCR for the charges incurred above.
  • Ask your insurance company how much will be allowable under your Non-Network benefits.
  • Ask for a written agreement from the Non-Network provider that they will take the Insurance company payment amount as Payment in Full, and gain their specific agreement that they will not balance bill you.
  • Then, and only then, go forward for Non-Network services.  

 

Out Net Out of Pocket Max Jump Under the ACA

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Most people focus on the Deductible of any insurance plan as the most important determinant of quality.  The Deductible, however, is NOT the most important feature of a health plan.  That honor would go to the plan element called Out-of-Pocket Maximum (or “OOP Max”).   Under the ACA the OOP Max is the grand total of all Deductibles, Coinsurance Amounts, and Copays for all covered benefits.

For In-Network (“In-Net”) claims, the OOP Max is the ultimate protector of the subscriber.  If the Subscriber has an In-Network Bill of $1,000,000 and a OOP Max of $2500,  then they will only be responsible for the $2500 OOP Max.  Prior to ACA, it was common to have In-Net OOP Max of $2500/$5,000 (Single/Family).  Post-ACA, In-Net OOP Max have increased, and are commonly in the $6000/$12,000 Range.

As compared to In-Net claims, a subscriber’s Out-of-Network (“Out-Net”) responsibility is always higher than In-Net.  Pre-ACA, plan summaries generally set Out-Net OOP Max’s at two times the In-Net Amount.  Pre-ACA, OOP Max amounts were frequently in the $5,000/$10,000 range.    The max amount that a carrier or network will pay for an Out-Net claim is generally 100%  (or alternative percentage) of the Usual Customary and Reasonable (UCR) amount for any given service.  The subscriber is protected by their Out-Net OOP Max for claims that are at or below the UCR amount.

However, since there is no contract between a carrier and an Out-Net provider, there is always the potential for the Out-Net provider to balance bill the subscriber above and beyond the UCR amount.  That means the liability for the subscriber is not limited for Out-Net claims.

Post-ACA, Out-Net OOP Max claims have been de-linked from the previous 2x In-Net OOP Max that has been traditional Pre-ACA.  One prominent carrier in Ohio carries an Out-Net OOP Max for Single at $100,000 and $200,000 for Family, and another prominent carrier describes their OOP Max as Unlimited.

Here are a few examples of actual insurance offerings in Ohio, with very high Out-Net OOP Max.

Carrier Plan Deductible (S/F) In-Net OOP Max Out-Net OOP Max
Aetna Bronze $6,300/$12,600 $6,300/$12,600 UNLIMITED
Anthem Bronze $6,000/$12,400 $6,400/$12,800 $18,000/$36,000
MMO Bronze $5,000/$10,000 $6,600/$13,200 $100,000 / $200,000

Using the same example above, if a $1,000,000 claim is incurred through an Out-Net provider, many such plans would require the subscriber to pay 40% of the UCR amount up to the OOP Max.  With these three plan designs above, the subscriber would be liable for $18,000 of the Anthem plan, $100,000 of the MMO Plan, and an UNLIMITED amount of the Aetna plan.  In addition, the subscriber would be liable for any balance billing Out-Net amounts.

So what can the consumer do about this?  First, the consumer must educate themselves on the coverage types and conditions that they are considering through their employer, or as an individual.  It is always best to know the panel network status of your doctors and hospitals prior to electing a policy.

Second, it is more important than ever to stay In-Net.  Going Out-Net is something to be avoided if at all possible.  However, if you absolutely need to see an Out-Net provider, it is very important to proactively discuss the cost of treatment with the provider, prior to receiving the service.   Failure to do so could lead to major financial liability in the long run.

Dave Petno
Accelerated Benefits

Speaking for Ohio Provider Resource Association 2015 Annual conference #OPRA

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What a great time yesterday speaking in Columbus to a great crowd of health care professionals in town for the OPRA annual conference.   Great people, great conversation,  Preparing for ACA requirements for 2015 and beyond.

Topic:  Top 10 Questions You Need to Ask About the ACA.  Read more about it here:
https://davepetno.com/2015/02/12/top-10-questions-accountants-should-ask-business-clients-about-aca/