It’s one of the most frequent complaints about health insurance…
We go to the doctor and are told that something – a test, service, or procedure – is absolutely necessary for our health and well-being. We ask the doctor if they’ll take our insurance and get a resounding: “yes – we can do that.” Weeks later, when the bill comes, we discover that the procedure wasn’t covered by insurance, after all.
What happened?
It could be that the treatment was medically necessary, but uncovered due to the nature of the procedure, like cosmetic surgery to remove a facial cyst. Or, it could’ve been denied because your insurer deemed the procedure experimental, like the use of Remdisivir for treating SARS-COV-2. Or, you could’ve been out-of-network in some way. Maybe you saw your usual doctor at a different facility, with a separate Tax ID number, which put you out-of-network. Perhaps you were at an in-network hospital, but the on-call doctor was out-of-network.
A wide array of things can go wrong. But, how were we supposed to know? We may have been incapacitated or even unconscious at the time of treatment. We may have made every effort – going in-network to a trusted provider – and still receive surprise bills. What’s going on behind the scenes?
Every single blood test, scan, and surgery – every IV bag and syringe under a hospital’s roof – has a universal, five-digit billing code called a “CPT.” As you’re treated, the codes get added to your chart. The hospital bills those CPT codes, combined with a series of diagnostic codes that describe your medical state, to your insurer. From there, the decision to pay or deny a claim relies on internal policies relating only to those codes – not the actual person. 99% of the time, the decision looks at the combination of CPT and diagnosis code to determine whether or not it’s a covered service.
This means that it’s expected you’ve asked the hospital for the CPT codes associated with your treatment, and then passed the codes on to your insurance company to check if they’re covered, before you even arrive at the ER. A uniquely-insane feature of the United States healthcare system.
Pricing is all over the place, too. If you’re lucky enough to have an insurance plan that only charges copays for everything, you don’t have to worry about so much. You’ve basically won the healthcare lottery. But if you’re like the other 90% of us who can only afford high-deductible plans, the negotiated rate for a given service makes all the difference. Negotiated rates are discount agreements between insurance companies and providers within their network. They’re widespread and pretty much the only reason anybody can afford treatment in America. For example, a PET scan costs around $8500, retail. But if you go to an in-network doctor, at an in-network hospital, you might only have to pay $850 – a 90% cost reduction.
If you need an expensive procedure, like a PET, MRI, or CAT scan, there could be as many as 4-5 in-network facilities in your area. But, the negotiated rate at each facility could run from a few hundred dollars at a small private clinic, to thousands at a large university hospital. You should call your insurance ahead with the CPT code for the test and request that they supply you with the negotiated rates for a few facilities in the area. Most insurers offer this pricing tool now. But again: you have to know how to ask for it.
Just never, EVER expect the doctor’s office to know the details of your plan in advance. On average, they manage something like 3,000 patients across 25 different plans. And the front desk is more than happy to say, “we’ll take your insurance.” But they’re just trying to keep your business.
What they actually mean is: “Sure, we’ll physically take your insurance card and bill them. But are we in your network? Doesn’t matter as long as we still get paid.”
