Tuesday, March 14, 2006

The Price is Right – Not.

I am fortunate in many ways, not the least of which is in the caliber of my colleagues. Several of us, prompted by the following email, have been debating an issue that has so far been, well, “under the radar:”
Just had a client call to complain that [his insurer] is refusing to reprice a network provider claim.
He has a HDHP [High Deductible Health Plan, typically as part of an HSA arrangement], had it for a couple of years, no problems. Now his wife is pregnant. She went to a network OB and asked for the bill to be submitted to the carrier. He got the EOB (supposed to fax to me later today) and no discount. He calls [the carrier] and is told since he does not have maternity benefits there is no discount.
The doc has a contract with Coventry (PPO) and it obligated to abide by the terms, regardless of whether the item is a covered expense or not. This is the way I have always understood it. This is the way I have explained to clients and have never had a problem.
I suspect the person he talked to at [the carrier] had no clue.
One of the benefits to network-driven plans (be they HMO’s or HSA’s) is that one is entitled to discounts on providers’ services. That is, one needn’t pay “retail” for a given procedure, or office visit, or prescription medication. We generally take these for granted, because most plans now include a network component.
Re-pricing is the process by which the insurance company applies those discounts to claims. I had never really given this much thought, and had also assumed that using a network provider resulted in a discount. Apparently, though, this is not always – or even usually – the case. In speaking with a number of my carriers (including the one in Bob’s email), it became readily apparent that any service which is not a covered benefit will not receive the discount.
This means that not only will that service not apply to the deductible, the client will pay full retail for the “privilege.” Talk about a double whammy!
I am somewhat ambivalent about this issue: on the one hand, it seems to me that the fair and reasonable way for carriers to handle this is to apply the discount, regardless of whether or not the service is “covered.” And there’s this: it’s unlikely that this would cost the insurer anything; they’re processing the claim and paying for the network anyway, so why not apply the discount?
On the other hand, if the contract (the policy) doesn’t allow for this, then the carrier is under no obligation to apply the discounts. And it appears that this is standard industry practice. That doesn’t necessarily make it right, but it also means that the carrier in this case is not out of the mainstream.
Another of my colleagues responded that “(t)he discounts are for the benefit of the carrier, which is passed to the insured client in the form of lower premiums and stop-loss limits. Since the deductibles and stop losses are exceeded by any substantial claims, the insurer is the true beneficiary of the discounts.
This is a sensible and informed response, and addresses the underlying issues quite well.
While I’m not sure that this issue has been resolved, I am sure of one thing: do not assume that your insurance policy will work exactly as you think it will (or want it to). Ask ahead of time not only if a given service is covered, but whether is eligible for the network discount. After all, a penny saved…
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