Problems Related to UCR and Health Insurance Claim Percentiles
Part 2, Chapter 4: Traditional Individual and Group Plans, Doctors' Bills Page 10
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The percentile system may directly affect the determination of the UCR. However, the system is complex, and involves a number of highly technical issues. A percentile and a percent are quite different. In non-technical terms, a percentile -- as it's used in the health insurance field -- refers to the level at which a particular percentage of charges falls for a specific procedure in a geographic area.
A full analysis of the basis for the reimbursement provided for a specific treatment requires information about the database used by the insurer and about the percentile used to determine the UCR. Insurers do not generally share detailed information about the database with consumers. However, the general principle is simple as it relates to the percentile: The lower the percentile, the lower the amount of reimbursement that's likely to be provided for major medical claims.
Let's assume that your policy provides for payment of major medical claims at the 80% rate (an 80/20 plan), that you have met the yearly deductible but have not yet met the yearly copayment maximum, and that you have filed a $1,000 major medical claim. That would generally allow for a maximum possible reimbursement of $800 (80% of $1,000), leaving a balance of $200. If your insurer sets payments to the ninetieth percentile, reimbursement will probably be provided for the full $800 in the majority of cases. However, if your insurer sets payments to the fiftieth, sixtieth, seventieth or eightieth percentile, reimbursement may be a great deal lower.
Table 11 contains an array of charges for the treatment of an appendectomy, the surgical removal of an appendix. As an illustration of the percentile system, let's assume that the surgeon's charge for the appendectomy was $1,600. Since Table 11 is intended to serve as an illustration of the basic concepts, neither the amount of the surgeon's charge nor the figures in the table represent actual amounts.
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