Predetermination of Medical and Insurance Benefits
Part 1: The Basic Tools, Chapter 3: Developing a Systematic Approach to Dealing with Health Insurance Page 5
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STEP TWO: PREDETERMINATION OF BENEFITS
The predetermination of benefits process allows the medical provider -- at the consumer's request -- to send the insurance company a statement listing a proposed treatment or test, or the proposed purchase of medical equipment. Within a few weeks, the insurance company will generally respond with a statement of the amount of reimbursement the company will usually provide for that test, procedure, or equipment.
That process offers the consumer valuable information. It makes it possible for the consumer to review the cost and possible reimbursement for treatments or tests in advance, and allows the consumer to make an appropriate decision before the test or procedure is performed. In addition, if there's a significant difference between the estimated cost and possible reimbursement -- or if the insurer determines that the test or procedure is not covered under the policy -- the predetermination of benefits process offers an opportunity for the consumer to discuss the economic issues with the doctor or the insurer in advance.
The predetermination of benefits process may be helpful in all non-emergency situations that involve significant cost, such as elective surgery, expensive medical tests, or the purchase of medical equipment. In such cases, the predetermination of benefits process can help to prevent situations in which the consumer may be caught in the middle between the medical provider and the insurer.
For example, several years ago I reviewed a claim with a reader of my newspaper column involving a situation in which an individual had several small growths surgically removed at the same time. When the surgery was completed, the surgeon sent the patient a bill that reflected the removal of each of the growths.
However, since the surgeries were performed at the same time, the insurer provided reimbursement for less than half of the total bill in terms of the removal of the second growth on the grounds that the removal of that growth was incidental to the removal of the first growth. That left the individual with a large bill for which he was responsible. The predetermination of benefits process would have given the consumer information about billing and reimbursement in advance. That would have made it possible for the consumer to discuss those issues with the provider and the insurer prior to surgery.
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