The recent expansion of complicated health plan benefit designs, with narrow provider networks, steep patient cost sharing and incomprehensible coverage limits, is enough to leave consumers wondering: What exactly did I “buy”?
Reports show that consumers are less and less satisfied with their plans, having little confidence that their health insurance will protect them financially if they or a family member become ill.
Even the most diligent consumers who take time to understand exactly how their health insurance policy works cannot get key information on payments. The surprise medical bill is a classic example. Even people who buy high-end policies with an out-of-network benefit so they may have a broad choice of health care options are seeing these bills. They pay higher premiums for the “luxury” of choosing physicians based on quality, rather than cost. But the often embarrassingly low payment for treatment creates large payment gaps that are passed along to patients, creating surprise bills.
Suppose your health insurance coverage for out-of-network services is based on a 70/30 co-insurance benefit design. In this scenario, you would assume that you would pay 30 percent of the amount billed for a medical service. If your physician files a $1,000 claim to the health plan for an out-of-network service, your assumption is the health plan will pay $700 and you will pay $300 (30 percent).
This is not the case. Health plans pay their percentage of the claim based on what they think the service is worth – what they call the maximum allowable amount for that particular medical service. So for a $1,000 claim, the maximum allowable amount could be $530. This means that the insurance pays 70 percent of $530, which is only $374. The remaining portion of the $1,000 charge is left up to the patient, a whopping $626. Surprised?
Ironically, these low payments for health care services come as health insurance profits soar. As reported last year, all five of the major health insurers beat the S&P 500 index over the past five years.
Some say physicians and hospitals not participating in their plans drive large amounts of “cost” in the system. Yet insurance companies design physician and hospital networks that actually exclude large numbers of quality providers, creating more out-of-network providers and more consumer surprises.
And, the fact is, physician payments make up a small percentage of health care costs. According to a recent study by the Commonwealth Fund, American insurers spent more than twice as much as any other developed country per person on administrative costs.
The percentage of premium revenue allocated to administrative costs and profit ranged from 16.5 to 27.1 percent. The interventions and profits of this third-party industry have only increased in the 20 years since that report, damaging patient access to quality care.
Physicians are on the front lines taking care of you and your family. While their focus should be solely on care, they instead must bear the brunt of patient frustration when insurers do not provide the coverage expected or promised.
The physician-patient relationship, which was once sacred, is marred today by mutual frustration toward third-party payers. But insurers can control cost and reduce frustration very simply: reduce administrative burden, cover the treatments needed to keep people healthy and include in their networks the dedicated physicians who provide those treatments.
Insurers should provide members with the access and coverage paid for through premiums – this is true consumer protection.
The Access to Care Coalition is comprised of 20 groups representing more than 10,000 physicians to address inconsistencies within New Jersey consumers’ state health plans; to call for more transparency from health plan providers and to address the issue of “surprise bills” that can accompany out-of-network bills. To learn more, please visit http://www.accesstocarecoalition.com.
Editor’s Note: This is paid sponsored content by Access to Care Coalition.