Bashing the big health insurance companies has become a popular national past time. No one wants to pay more than they have to, or get less than they deserve. The exact ways these things are paid are government regulated, contracted, and can be appealed by patients and providers, and sometimes reviewed by 4 different medical review groups. Claims are processed by computers and both human error, programming error and policy protocols can play a part in things.
The consumer for their part doesn’t see most of the behind the scenes complications or simple errors that can affect them, and much of it they can’t change even if they did see it. There is one thing they can do, however, that could greatly increase their chances of getting the care they need when they need it. They have to become discerning, educated consumers.
It is amazing to see how carefully someone will choose their brand of energy drink or test out a mattress but will choose their health insurance policy with a blindfold and a dart. As a consumer you are buying a product that you will pay for every month sometimes as much or more than a car payment, and should act accordingly – read, or at least skim, the evidence of coverage booklets that are sent. If you have a chronic condition then read carefully the parts that pertain to you. If you are healthy, look at the parts that cover emergencies. Ask questions of the sales person or benefits administrator where you are employed. Know what is being offered and how to use it best. There isn’t a single person that wouldn’t like to get a therapeutic massage but to get one you have to know if it is offered on your policy or what ‘medically necessary’ means to your doctor.
The first and most prevalent type of policy is the HMO, or Health Maintenance Organization. In this system the insurance companies take a premium from the member, keep some of it, and pay the rest in monthly payments, called capitation to a administrative medical group who has contracted with medical service providers (labs, doctors, hospitals, techs…etc.) for specific dollar amounts for each procedure code they are licensed to perform. In most HMOs the member is allowed to choose from a variety of groups who each have contracts with various professionals. (The exception to this is the oldest of the HMOs who does not allow it’s contracted providers to work with anyone else and has no other groups but it’s employees for a member to see) In most HMOs the member must choose a primary care doctor, or PCP, who will serve as their ‘gate keeper’. They will decide when to send the member to a specialist, lab or to get an MRI. If the patient and doctor don’t get along but the administrative medical group has already been paid then the patient wont be able to switch medical groups till that capitation period is finished and a different group can be paid instead. If the specialist the member wants to see is not contracted with the group, the primary care physician can’t refer the patient to them, as the medical group will not pay a non-contracted specialist unless it is an emergency. Why would anyone want to be that restricted and choose and HMO?
HMOs usually have the member pay co-pays; flat fees for services rendered. The member knows in most circumstances what they are going to have to pay for each service if they have looked at there booklet or talked to their insurance company. It is a better plan if you have a chronic illness where it is expensive to maintain your health. Unless you have a lot of extra cash and are very picky about what specialists you want, an HMO can be a convenient way to limit costs. That is, if you understand the limitations of your choice.
The second type is a PPO, or Preferred Physicians Organization. In this system the insurance companies take a premium from the member and directly pay the contracted rate to the provider. In this way members can pick a variety of doctors that are contracted by the insurance company and can refer themselves to most specialists if they already know what specialist they need. This type of insurance is great if you only need occasional care and have some savings in case of an emergency. For this type of policy it is also normal to have a pre-existing clause that says you will not be covered for any lingering injury or illness you have not told the insurance company they will be paying for. It would be like buying car insurance after you had a car accident and expecting the insurance company to pay for your car repairs. You must have had other insurance for at least six months and disclose your condition for your new insurance with this plan to pay for your continued care. Why do you need savings when you’re paying for insurance?
PPOs usually have deductibles, a set amount that the member will have to pay the care providers before the insurance company pays anything. They also have what is called co-insurance instead of co-pays; these are percentages the member has to pay, rather than set amounts. While paying 10% of a $200 dollar bill for blood work would only come out to $20 for the member, a serious incident that sends the member to the ER may cost in the range of five or six digits which makes the member’s cost only one decimal place lower than that (ex. if an ambulance ride, E.R. visit and MRI cost $24,000 than the member will be paying $2,400 of that. AFTER they pay the $50 – $5000 deductible. Can you afford that?) These plans often also have co-pays for simple things like a regular office visit but watch out if the blood tests that physician orders are expensive. Once again the member has to skim through the booklet to look up the percentages and be aware of what will hit the deductible and what will only have a co-pay. Be aware of what benefit your using when a specialist says they will need to do some tests. When in doubt every insurance card has a customer service number on the back – be patient, have a clear idea of what you want to know and have your card out to give the policy number when the representative comes on the line.
The last of the insurance types is the indemnity plan. The member pays a premium to an insurance company and then the insurance company usually adds a percentage of what the member is paying to the total saved’ amount and when the member needs service they pay for it out of their pocket and the insurance company pays them back. These plans mostly cover the same things the HMO and PPO plans do and pay for what is medically necessary. You do, however, have the option of going to ANY licensed health professional. Versions of this include the Health Spending Account (HSA) and Flexible Spending Account (FSA) where the employer will take money out of the member’s checks and sometimes adds money and puts it in a pre-taxable account to pay for things like a high deductible or some other service that the policy does not cover. (FSAs were once known as medical Individual Retirement Accounts (IRAs)) – with these types of accounts the money is there when you need it for whatever doctor or expense you would like to spend it on within reason. Why wouldn’t everyone choose this type of plan?
When a spending account is empty, that’s all there is. Period. As kind hearted as some doctors are, very few of them can afford to work for free for long. One accident can mean your coverage is over for the rest of the year and you still could be in debt. For the true indemnity plan it also means that you have to have the money up front to pay for your services and then time enough to wait for all the paperwork to go through to get your money back.
If you don’t like these options, one thing that anyone can do that has nothing to do with insurance and outside companies, is to simply put the premiums you would have given to the insurance company into a savings account. Try to make arrangements and/or deals with health care providers to charge you the same rates the insurance companies have negotiated and shop around for the best deals (not the cheapest providers, because the last thing you want to be stingy with, is your health)
It would be nice if everyone could get what they wanted when they needed it. Health care in the US, however, is a business, it is providing you a service or product to make someone else money. Many people would like to change this arrangement and that may be the way it will go in the future. For right now, however, it is important for the people who are paying for the insurance to act like the consumers they are, know what they are purchasing, and what it will, and will not pay for, when they need it most.