Hassle-Free Health Coverage: Usual, Customary and Reasonable Charges
Co-insurance amounts are based on what the insurance company considers the usual, customary and reasonable (UCR) expenses or charges. In addition, when the stop-loss is reached, the insurer will pay 100 percent of the UCR expenses.
The introduction of reasonable and customary language into the policy means you may incur some additional out-of-pocket expenses-if the expenses incurred are not considered reasonable and customary.
The UCR amounts are determined by the insurance company. Periodically, the services provided and charges made by doctors and hospitals are reviewed by the insurance company. The review takes into account geographical differences that allow for differences in the charges relative to the provider's overhead expenses, location, etc. The insurance company then establishes UCR charges for specific services in a specific geographical area.
Example: Julie has an tonsillectomy performed in a small farm community in central Nebraska. She is charged $1,500 for the procedure. By coincidence, Julie's friend Suzy has the same procedure performed at a New York City hospital and her charge is $2,000. It's possible that Julie's incurred expense of $1,500 for the tonsillectomy would be considered reasonable and customary by her insurance company. It is also conceivable that Suzy's $2,000 charge would be reasonable and customary for the New York City area. If so, their claims would be paid in full by their respective insurance companies. On the other hand, assume that Julie incurs a $2,000 charge for her tonsillectomy. She hasn't reached the stop-loss point but has satisfied her deductible. Julie's insurance company will pay 80 percent of $1,500-the UCR charge-or $1,200. Julie is responsible for 20 percent ($300) and now she must contend with a $500 excess charge. Her insurance company views the $500 as excess or unreasonable for that part of Nebraska. Julie has to pay $800 out of her own pocket to cover the expense. The excess is an additional out-ofpocket expense for Julie which is not counted by the insurer towards the stop-loss point or any other provision of the policy.
What can someone dealing with a UCR dispute do? One option-the one that insurance companies and health care providers hope you will choose-is simply to pay the difference and forget it. Another option is to appeal the decision with the insurance company's internal review structure. A third is to file a complaint with state regulatory authorities, though major medical insurance companies are usually allowed wide discretion in setting UCR fee schedules.
But there's a less contentious approach that often works. Explain to your health care provider that your insurance company uses a UCR limit that's lower than the fee you've been charged. If you back this argument up with the insurance company's paperwork, you may be able convince the provider to bring the bill in line with the UCR fee schedule.
-Often, doctors and hospitals would rather coordinate their fees with an insurance company's UCR schedule than fight it. They don't want to be identified with difficult claims...this sometimes brings scrutiny and slower payments.
In Julie's case, she could tell her doctor that her insurance company considers $1,500 to be a UCR fee for her tonsillectomy and will only reimburse that amount. The doctor may agree to accept the insurance company's reimbursement and Julie will only owe the $300 co-insurance portion. If the doctor insists that the full amount be paid, Julie could simply ignore the bill-and the doctor's collection efforts which will likely follow. There is always a chance that the doctor will give up. But that's a risky approach that most people should probably avoid to protect their credit ratings.
The problem with UCR disputes is that a doctor may not consider a high fee to be unreasonable; only the insurance company does. And you are caught in the middle. Unfortunately, there is no simple answer when the insurance company deems a charge to be unreasonable.
One obvious preventive measure is to find out the cost of a procedure before it becomes a claim and then check with the insurance company to determine how much of this charge will be paid. This gives you the chance to discuss the fee with your doctor before incurring any expense.
And your doctor will probably be more inclined to reduce the fee before it becomes a claims matter.
Another alternative is to find a doctor or surgeon who will perform the surgery for the UCR charge as determined by the insurance company. However, this is probably an unacceptable option because, if you are considering having surgery or some similar medical work, you have enough to worry about without shopping for a bargain from an unknown doctor.
People usually take the position that they buy major medical insurance because they'd prefer to have surgery done by their own doctors.
So-as difficult as it may be-the best strategy is to get a copy of your insurance company's UCR fee schedule to your provider before you undergo major treatment.
